Pension funds are keeping money in commodities, which make up less than 3 percent of the average portfolio, according to Credit Suisse Group AG.
The size of the allocation “alleviates some of the pain” from lower prices, according to the Zurich-based company. The Standard & Poor’s GSCI index of raw materials fell 2.4 percent this year, led by silver and gold.
Following are comments from Kamal Naqvi, London-based head of commodities sales for Europe, Middle East and Africa at Credit Suisse. He spoke to reporters in the city yesterday.
“For people in commodities, index money is hugely important, but for pension funds, this is only a very small part of their portfolio. Their allocations to bonds and stocks are far more important. This alleviates some of the pain of poor performance.
“There is no evidence at all of pension funds getting out of commodities.
“The feedback from pension funds and consultants is that they still believe in the asset class, but they are changing ways of exposure. Plain beta length is severely challenged, and there is a clear move toward being more active. This is both active length and also absolute return. The line between some real-money investors and hedge funds is increasingly blurred.”