Hedge Funds, Institutions to Increase Commodity Investments, Barclays Says

Date: Friday, December 10, 2010
Author: Yi Tian and Asjylyn Loder, Bloomberg

Hedge funds and institutional investors will put more money into commodities next year on bets that a recovery in the global economy will boost demand for metals, grains and energy, according to a Barclays Capital survey.

About 76 percent of the respondents surveyed at a Barclays conference yesterday in New York predicted a bigger inflow into direct commodity investments than in 2010. New investments this year were $50 billion, the London-based bank said. Copper will probably have the biggest gain next year, followed by grains and crude oil, according to the survey.

“What we are seeing now is a pretty healthy, robust recovery developing in the U.S. and other parts of the world,” Kevin Norrish, a managing director at Barclays, said today at a press conference. “A combination of better financial-market confidence and reasonably good economic growth has set a favorable platform” for commodities, he said.

Fifty-two percent of the respondents said they increased their direct commodity investments in the past 12 months, while 21 percent said they held the amount constant.

Ninety-one percent of the respondents said they will initiate, maintain or increase commodity investments over the next three years, Barclays said.

More than 300 investors were surveyed, Barclays said. Forty percent were hedge-fund managers. Institutional investors, such as pension funds and endowments, accounted for 40 percent, and the rest were retail investors, Barclays said.

Sugar, diesel, steel and natural gas were least favored, the survey showed.

For Related News and Information: Top energy stories: NRG Top commodity stories: CMD Top agriculture stories: AGR Top metal and mining stories: METT

To contact the reporters on this story: Yi Tian in New York at ytian8@bloomberg.net; Asjylyn Loder in New York at aloder@bloomberg.net