Over two thirds of institutional investors (67 per cent) expect the level of allocation into commodities to increase during 2021 and a further 32 per cent expect it to stay the same. This is according to new research with 150 European institutional investors and wealth managers with a combined AUM of USD292.8 billion, which highlights the positive sentiment towards commodities.
The study was carried out by NTree International Ltd on behalf of investment manager China Post Global, which promotes a family of innovative Exchange-Traded Funds (ETFs) providing access to commodities and emerging markets through its brand Market Access. NTree, which has expertise in investor education and the distribution of ETFs, promotes Market Access ETFs in Europe.
When asked about the investment prospects for a range of commodities, the most positive outlook was for gold, followed by natural gas and crude oil.
The research also highlighted the most important features of commodities as part of an investment portfolio, with 68 per cent of investors citing vaccine optimism and hopes of an economic recovery this year fuelling gains in commodity prices, followed by the protection they provide portfolios with insurance against inflation (66 per cent), and the strong diversification benefits they provide (61 per cent).
Other less important factors cited included the fact that, historically, many commodities are currently generationally cheap (58 per cent) and the strong recent growth/price appreciation of commodities (55 per cent).
Timothy Harvey, CEO at NTree, comments: “Our research shows the growing role for commodities in investment portfolios, thanks to their hedging and diversification characteristics. Many, particularly metals, have also delivered strong growth over recent years.”
Danny Dolan, Director at Market Access, says: “This research shows the strong investor sentiment across Europe towards commodities, both for their return outlook and their inflation-hedging properties. Gold and energy in particular are both at attractive entry levels in our view, as are gold mining equities.”
Market Access ETFs combine intelligent index selection, optimal replication, transparency and liquidity. They are diversified investment solutions for investors across Europe, who use Market Access ETFs to implement their investment strategy in the commodity and emerging markets space.
