London, September 2010

Active vs passive management practices

Commodity investments passed an important milestone in July 2010 when assets under management (AUM) surpassed US$300 billion for the first time as commodity market inflows bounced back.1 Over the past 10 years, commodity AUM has risen by some US$290 bn [that’s 2,290%] with investment inflows into medium term notes, commodity index swaps and exchange traded products predominating.

Much greater switching in the proportion of funds allocated to individual commodities indicates that the investment focus is switching away from indices with fixed weightings towards dynamically re-weighted products or single-commodity indices and ETPs that enable a more active and tactical approach to take advantage of particular trends or futures market structures.

By Commodities Now

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