Commodities attract investors: Barclays Capital

LONDON: Commodities will likely attract a record $60 billion this year as investors seek to diversify their assets, Barclays Capital said.

Inflows so far this year are almost $55 billion, already more than the previous full-year record of $51 billion set in 2006, the bank said in a report. Total commodity assets under management will probably expand to $230 billion to $240 billion by the end of the year, Barclays said.

The S&P GSCI Index of 24 commodities rose 46 percent this year, rebounding from last year’s 43 percent slump, as governments spent at least $12 trillion to lift their economies from the worst recession since World War II. Copper, lead and sugar doubled and gold reached a record.

Barclays’ data cover exchange-traded products, U.S. commodity-index-linked mutual funds and so-called medium-term notes, which are customized products.

Holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, reached a record 1,134 metric tons in June. At the time, it exceeded Switzerland as the world’s sixth-largest gold holding.

The Dollar Index, a six-currency gauge, fell 7.3 percent this year, buoying demand for commodities as a hedge against further weakness in the currency and making dollar-denominated commodities cheaper for those holding other monies.

Investment products linked to commodities attracted $1.34 billion in the week ended Nov. 18, the most in 3 1/2 years, bringing the year-to-date total to $13 billion, EPFR said.

Funds investing in physical commodities, rather than stocks of commodity producers, “dominated the action,” EPFR said.