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• According to "Barclays", the sector has yet to peak
Hedge funds and other major investors are making significant investments in commodities, and this trend could continue, as optimism that the worst of the global recession is over increases, experts of British bank "Barclays" Plc say.
Kevin Norrish, director of commodity research at Barclays, said, as quoted by Bloomberg: "People are investing in commodities again because the prices are going up and because the fundamentals look a lot better. We"ve seen a lot of money come in. Hedge funds certainly have come back into commodities over the last few months in a big way. It hasn"t reached its peak yet".
The Reuters/Jefferies CRB index, which tracks 19 raw materials surged 14 percent in May, the most since July 1974.
"There are a number of big investors who are very positive toward commodities now", said Norrish who added: "If you have commodities in your portfolio, it does give you diversification that other assets don"t".
Most large investors want to have 5% of their portfolios directly invested in commodities, Norrish said.
The London Metal Exchange index of six metals has jumped 48 percent this year after falling 49 percent in 2008.
Still, the surge in base and precious metals may slow down out in H2, Norrish said, mainly due to slowing demand from China.
"We don"t think China is going to be the driving force that it has been in the early part of this year", Norrish said.
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