The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.

Base metals offer futures alternative

Bond investors finally appear to be getting the message that exposure to commodities can be a useful hedge in a portfolio. And if they have invested in the right commodities, they could find themselves in an excellent position to profit from any forthcoming US interest rate rise.

The latest Commitment of Traders report from the US Commodity Futures Trading Commission (CFTC) shows that after years of shying away from this esoteric asset class, investors are in fact pushing capital into energy, base metals and precious metals in the greatest volumes since 1983.

It is not just speculative traders that are driving this trend, according to Deutsche Bank. "Speculators come in and out of the market but pension funds are now leaping in, and that is unlikely to reverse," says Michael Lewis, the bank's new head of commodities research.

Capital inflows into commodities have become so pronounced that concerns are mounting that a bubble is being created. "Speculative inflows do increase short-term volatility risks, but we are starting to see new pension fund structural money coming in," says Lewis. But he adds: "It would be extreme to say we are seeing a commodities bubble."

This is because even with price rises, several commodities still look cheap.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree