Funds hold US$300b in commodities first time since 2013

[SEOUL] A boom in raw-material prices has helped lift commodity investor assets under management to more than US$300 billion for the first time since 2013, according to Barclays Plc.

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 totaled 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.

The Bloomberg Commodity Index was little changed at 10:07 am London time, after sliding almost 2 per cent over the past five sessions.

Exchange traded product assets under management increased by US$8.3 billion, or 6 per cent, over August to October, contributing the most to rising commodity investor AUM, Barclays said. Net ETP inflows totaled US$2.8 billion over the period, which means rising commodity prices boosted AUM by around US$5.5 billion, all else being equal, according to the bank.

BLOOMBERG