NTree : New research with 50 UK pension funds with a combined AUM of $76 billion reveals 78% believe that markets have entered a commodity super cycle – a decades-long period during which commodities are predicted to trade above their long-term price trend.
Timothy Harvey, CEO at NTree
As a result, many expect to go overweight in commodities such as precious and industrial metals over the next 12 months.
The study was carried out by NTree International Ltd, a specialist marketing and distribution, and investor education firm. NTree represents Global Palladium Fund’s range of metals ETCs and China Post Global’s Market Access ETFs in Europe.
The findings show that over the next 12 months, 64% of UK pension funds expect to go overweight in their allocation to gold, whilst 42% expect to overweight silver. In terms of industrial metals, Platinum Group Metals continue to be an area of interest for investors with 46% of pension funds expecting to go overweight in platinum and 46% expecting to increase their allocation to palladium.
Base industrial metals are also starting to attract increasing interest with 40% of funds looking to increase their allocation to the nickel whilst 46% are also looking to overweight their exposure to copper.
The study showed that when asked what percentage of their exposure UK institutional pension funds should have to precious metals, 18% said 3-5%, and 66% said between 5-7%. For industrial metals, 44% said their exposure should be 3-5%, 24% said between 5-7%, and 24% said 7-9%.
The research shows that UK pension funds are also likely to increase their exposure to China, a key consumer of commodities and driver of global industrial production – with 44% planning to increase their exposure to Chinese fixed income and 48% to Chinese equities.
Hamad Ebrahim, Head of Research at NTree, comments: “There has been a great deal of speculation about whether or not we are in a commodities super cycle, but our research certainly seems to suggest that many pension funds believe that already. As a result, they are proactively taking steps to increase their exposure to commodities such as precious and industrial metals which will participate and benefit from long-term economic growth.”
NTree represents Global Palladium Fund (GPF) which has four metal ETCs (gold, silver, palladium and platinum) listed on the Deutsche Börse and London Stock Exchange. They have the lowest charges with total expense ratios (TER) ranging from 0.145% to 0.20%. Targeting Family Offices, wealth managers, institutional and other professional investors, the new physically-backed gold, silver, platinum and palladium ETCs will track the spot price of the respective metals they cover.
In an industry first, the ETCs use Blockchain technology to record bar information and provides an extra layer of security and transparency.
NTree also represents China Post Global, which promotes a family of innovative Exchange-Traded Funds (ETFs) providing access to commodities and emerging markets through its brand Market Access. Market Access ETFs combine intelligent index selection, optimal replication, transparency and liquidity. They are diversified investment solutions for investors across Europe who use Market Access ETFs to implement their investment strategy in the commodity and emerging markets space.