Flood of new investors fuels commodity boom
More than a third of commodities investors entered that market less than three years ago, while more than one in 10 only started investing in over-the-counter commodity derivatives in the past year, in a stark sign of the sector’s booming growth.
A new survey of 420 companies and 87 commodities investors found that 26% of investors have been involved in the commodities market for between one and three years, while 11% entered the market in the past year. The research was conducted by consultancy firm Greenwich Associates,
Sixty-two percent of those polled said they had more than three years’ experience of commodities investment.
Greenwich consultant Andrew Awad said: “While the long-term fundamentals of global energy and other commodities markets are being driven by increasing demand, there is little doubt that in the immediate term, speculative investors are driving up both trading volumes and prices.”
More than half of investors cited diversification as their motive for using commodities, with 38% citing the generation of alpha, or outperformance versus benchmarks, as the driver.
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