With risk-appetite returning to the market it appears the trade of last year may back in fashion at funds around the world.
Barclays Capital observe in their latest Commodity Investor letter that fund exposure to commodities has increased sharply over the past few weeks with non-commercial net length in US commodity futures back firmly above 800,000 lots for the first time since July 2008.
As can be seen below non-commercial exposure to commodities had fallen substantially over the crisis period:
And it’s not just hedge funds getting in on the game. As BarCap write:
Institutional investors, Sovereign Wealth Funds and asset managers alike are going overweight commodities too. Indeed, earlier this month, Berkshire pension fund made an allocation of 9.2% of their $1.6bn AUM into commodities, following other pension funds in the US also examining potential opportunities to gain exposure to the asset class.
Which is all very well, but:
While we expect this trend to continue as commodity market balances turn more constructive with a revival of the global economy, we do not foresee a one-size fits all solution to prevail. Rather, depending on differing fundamentals, weightings of exposure to the sub-sectors is likely to vary, along with the strategies employed to do so.
Oil at six-month high – FT Alphaville
So who says there’s no oil/dollar correlation – FT Alphaville
The coming oil-equity disconnect or the end of efficient markets theory? – FT Alphaville
Oil, the great inflation hedge – FT Alphaville