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Commodity investment funds have drawn a net inflow of $28.7 billion in new cash this year through 10 May, the Financial Times reported.
The Standard & Poor’s GSCI commodity index was up 37 percent this year as of 25 May, even after receding from higher marks in March.
In contrast, MSCI’s global equities index has given up 16 percent as of that date this year. ICE Data Services’ world high-grade bond gauge is off 8 percent.
More than 95 percent of new cash coming into commodities funds has gone to index funds rather than item-specific funds that track only wheat or lithium, for example, according to Morningstar data.
The SPDR Gold Shares exchange-traded fund was the most attractive, clearing a net $7.2 billion.
“We have a pretty diversified portfolio at all times but we’re leaning more into natural resources and commodities, which is counter to what we’ve done historically if we see this kind of global growth slowdown,” Even Rudy, real assets fund manager at DWS told the FT.
The world’s commodity prices rose as China matured as an industrial power during the first decade of this century.
Commodities then lost favor amid volatile prices and concerns about sustainable sourcing.
TREND FORECAST: Even as the world’s economy slows, demand for many key commodities—especially food and metals—will continue to outstrip supplies.
As a result, commodity prices in several categories will remain elevated for the foreseeable future.