Institutional investors have discovered raw materials. For two years, their activity in these markets literally soared. Explanation of Stefan Weiser: they offer good protection of the capital invested when bond and equity markets do not provide sufficient total yields.
What are the reasons for the increasing interest of the investment fund for raw materials
Pension funds are interested in this asset class, because it offers a profitability interesting, comparable to that of the actions, even if it is negatively correlated to these. When you add material first to a balanced portfolio of shares and bonds, this translates into a likely increase in profitability expected and a lowering of its risk profile. In addition, raw materials can play a role to hedge against excessive economic growth. Profitability is directly related to the industrial cycle. Raw materials tend to well behave when financial assets are in difficulty.
This interest money for raw materials is recent
Today, raw materials represent, on average, 3 to 5 of the portfolio types of pension funds. In 2000, institutional investors placed approximately 3 billion dollars on index GSCI (Goldman Sachs Commodity Index); Today, $ 20 billion. Institutional investors have reinforced their positions on the markets of raw materials since two years about, because, in their majority, they do expect little to the return of the bull stock market of the années1990. Thus they began to search for "alternative assets" of portfolio diversification. However, I do not regard this concept of alternative assets can be applied to raw. It is a full asset that cannot be equated to the funding of arbitration or non-quoted shares. On the other hand, raw materials should be and will be an alternative to the actions and obligations, without, however, replace them.
How do you explain the best performance in the long term of contents first to financial assets
Raw material risk premium is slightly higher than that of action for long periods of time. Between 1970 and 2003, GSCI index grew 11.85 per year on average (calculated in dollars), and the Standard & Poor's 500 by 11.18, while U.S. Government bonds rose from 8.52. The appetite for risk of investors must translate into adequate reward that raw materials have been able to provide.
Fear destabilization of markets for the materials first by intense short term speculative activity
No, even if the speculative activity in these markets has reached its historical highs, especially in energy. We urge caution on this sector, because global demand is expected to weaken in the second quarter, while speculative long positions are high. Crude oil prices are too expensive for about $ 4 per barrel. It is different for other raw materials. Over long periods, markets for raw materials are driven by the dialectic between the supply and demand real. The current rally is largely determined by the fundamentals, by production of supply constraints. In the past, there was not enough was investment in infrastructure and production equipment. Hence the current bottlenecks in supply, courses on the rise, a significant volatility and, in total, increasing gains for investors.