Those already pumping money into commodities seem to be happy with the results. In Canada, for instance, a recent survey by Benchmark, the investment analytics arm of RBC Global Services, showed that two thirds of investment gains made by Canadian pension plans during the first quarter of the year came from investments in energy stocks. For Dutch pension fund PGGM commodities was the best performing segment of its portfolio during last year. The €57bn fund dedicates around 5 per cent of its assets to commodities with the benchmark being weighted 75 per cent to the Goldman Sachs Commodity Index (GSCI) index and 25 per cent to its energy sub-sector.
Benno Meier, European head of commodity strategy at Barclays Global Investors, said that apart from the most sophisticated Dutch investors, commodities were also being used by Swiss institutions, while UK interest was growing.
“Some of the misconceptions [about commodities] are being demystified,” Mr Meier said. “Volatility can be high but not much higher than equities. You can also get an index exposure to commodities, something impossible for hedge funds or private equity, and [difficult] for real estate because the liquidity just isn’t there.”
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