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To: ms.smartest.person who wrote (539)12/16/2005 12:34:23 PM
From: ms.smartest.person  Read Replies (1) of 3198
 
Commodity investment set to rise sharply
venerdì, 16 dicembre 2005 8.41 167
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LONDON (Reuters) - Investors plan to raise their exposure to commodities over the next three years, viewing direct investment in commodities as a long-term strategy designed to diversify their portfolios, according to a survey by Barclays Capital.

Over 70 institutional investors were questioned at Barclays first annual Commodity Investor Conference in New York this week.

Some 54 percent expected funds under management in the sector to increase from $70 billion (40 billion pounds) currently to between $90-120 billion by 2008, and 32 percent expect a figure even greater than $120 billion by then.

Almost 70 percent of the respondents expected to increase commodity exposure to 5 percent or more of their portfolio.

On average roughly two thirds of the respondents already had some commodity exposure, but for most this was 5 percent or less of their total portfolio, said Barclays.

The bank found that investors were concerned about current high price levels and planned to reduce exposure to index-based products, substituting less directionally sensitive structured products such as commodity baskets and becoming more active managers of their commodity portfolios.

The result was consistent with the audience's view that large new inflows of institutional investment into commodities were likely over the next three years, said the report.

Almost half the audience expected to hold their commodity exposure for three years or longer with most citing portfolio diversification as the most important factor in the decision to add commodities to their mix of assets, said Barclays.

The major concern of investors was current high commodity prices. Oil, base and precious metals are close to record highs.

For this reason only 11 percent of the audience expected to invest in commodity indices over the next three years, whilst 68 percent expected their investments to take the form of a combination of different strategies including active management and structured commodity products.

© Reuters 2005.
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