Funds hold $407b in commodities, a four-year high

SEOUL • A boom in raw material prices has helped lift commodity investor assets under management to more than US$300 billion (S$407 billion) for the first time since 2013, according to Barclays.

As major resources indexes have recovered from lows in the middle of this year, assets under management have risen for three consecutive months through October to US$305 billion from US$291 billion in July, the bank said in a Nov 15 report. Rising raw material prices accounted for US$14 billion of the increase, while net inflows totalled only US$200 million, according to Barclays.

Signs of tighter supply and stronger demand boosted the Bloomberg Commodity Index more than 10 per cent from late June through early this month, with everything from nickel and copper to oil and sugar driving the gain.

Still, there are doubts emerging about whether investors were too optimistic, with concern mounting over slower growth in China, the top consumer of metals, grains and energy. The raw material gauge has dropped from the highest level since March and slid for five straight sessions through Wednesday.

"The current strength in the oil and copper markets is likely to wane in 2018, as fundamentals are expected to soften once again," Barclays analyst Warren Russell wrote in the report.

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A version of this article appeared in the print edition of The Straits Times on November 18, 2017, with the headline 'Funds hold $407b in commodities, a four-year high'. Print Edition | Subscribe