Why pension funds need commodity exposure

Pension funds’ need to outpace the effects of inflation has prompted growing exposure to alternative investments. Commodities look to be a good source of such diversification. But should exposure be direct or through an index? And if the index route is chosen, which benchmark is to be preferred?

Participants

RB, Watson Wyatt

   Commodities is interesting, particularly as a diversifying asset class. We’ve been talking to our client base in this area for the last few years. However, the take-up of commodities from the institutional base is still limited. I think when investors are looking at this asset class, it is from a beta, or an asset exposure perspective. But things are moving quickly and I think there are interesting alpha opportunities in this area as well as opportunities for different structures that might be more appealing than some of the benchmark indices.

Access intelligence that drives action

To unlock this research, enter your email to log in or enquire about access