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Over two thirds of institutional investors (67%) expect the level of allocation into commodities to increase during 2021, according to new research from NTree International with 150 European institutional investors and wealth managers with a combined AUM of $292.8bn.
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% 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%), and the strong diversification benefits they provide (61%).
Other less important factors cited included the fact that, historically, many commodities are currently generationally cheap (58%) and the strong recent growth/price appreciation of commodities (55%).
Ntree CEO Timothy Harvey commented: “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.”