Are commodities at risk of definancialization?
(Reuters) – Unless returns on commodity futures and options start to pick up soon, institutional investors may sour on the asset class and scale back or terminate their exposure to it, ending a decade-long trend that has seen increasing financial involvement in commodity derivatives.
The first five months of 2012 have brought more disappointment for pension funds and other investors with a long position in a diversified basket of commodity futures.
This is very good news. Also very good news is the fact that the author, John Kemp, goes beyond the traditional treatment of investment in food commodity markets through index products to examine the shift into active management – most journalists, and effectively all academics looking at this, completely miss this transition.
The whole piece is very, very well done and worth checking out here.