Commodity managers warm up to metals as world economy improves

Thu Oct 10, 2013 7:20am EDT
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* Miners boost hybrid equity and futures funds

* Optimism on China, U.S. lifting cyclicals

* Managers stick with gold as QE3, debt wrangling persist

By Claire Milhench

LONDON, Oct 10 (Reuters) - Base metals are back in favour with commodity managers after a long period in the dog house, reflecting a new enthusiasm for growth-oriented assets as the global economy picks up.

"The key economic regions of the world have either resumed a slight upward trend or have at least put the worst behind them," said Ronald Wildmann, an adviser to the GFP Long Mining Fund , which returned almost 15 percent in the third quarter. "In China, the hard landing feared by many has not come to pass."

Commodity prices as indicated by the Thomson Reuters-Jefferies CRB index rose 3 percent in the third quarter, compared with a 6 percent fall in the second quarter.

This turnaround meant the average actively-managed fund in the Lipper Global Commodity sector was up 1.94 percent, compared with a loss of 9.58 percent in the second quarter.

But it was hybrid funds, which invest in natural resource equities and commodity futures, that topped the Lipper league table, as these benefited from a rally in the mining sector.   Continued...