Barclays: $4bn New SPs in $225bn Commodities Products (Bloomberg News)

By Saijel Kishan
May 2, 2008

Commodity assets under management expanded by a record in the first quarter to $225 billion as prices for energy, metals and agriculture increased to all-time highs, Barclays Capital said.

Assets climbed by $28 billion, almost three times the gain in the same year-earlier period, the bank said in a report e-mailed late yesterday. Rising prices accounted for about half of the growth, it said. The figures exclude hedge funds' direct holdings in futures markets.

``The investment community as a whole is still underinvested in commodities,'' Kevin Norrish, analyst at Barclays Capital, the securities unit of London-based Barclays Plc, said by telephone.
Pension funds and other money mangers boosted holdings of commodities as the asset class outperformed stocks and bonds, and the dollar fell to a record low against the euro. Prices for oil, wheat and gold climbed to all-time highs this year.

The Astmax Commodity Index, the best-performing commodity index of those tracked by Bloomberg, climbed 14 percent in the first quarter, while the Standard & Poor's 500 Index of stocks declined 9.9 percent. U.S. Treasuries have returned investors 2.6 percent in the period, according to Merrill Lynch & Co. indexes.

Investments in funds tracking commodity indexes rose by $14 billion to $139 billion, while holdings in exchange-traded commodity products grew by almost $7 billion to $45.8 billion, Barclays said. . . . More than $4 billion was invested in so-called structured products linked to commodities, the bank said. Such products are tailor-made securities designed for clients when standardized contracts and indexes won't fulfill their needs, or when investors are restricted from using derivatives to gain access to a particular asset class.

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