The second half of 2009 proved to be successful for equity markets around the globe. Many investors have expressed satisfaction with their portfolio’s exposure to stocks and are looking to gain access to sectors that offer low correlation to equity markets.
For the first two months of 2010, BHA analysts have seen increased investor interest in the energy and commodity sectors. Approximately 18 percent of investors looking at sector-focused funds cited energy and commodity related strategies. Of these investors, some are researching funds that concentrate on physical and hard commodities, expecting them to have the lowest correlation to equity markets.
A consulting firm based in Switzerland that specializes in energy and commodities sees great opportunity in these sectors. It believes that the current gap between supply and demand will lead to higher prices. The firm also anticipates emerging markets to have abundant energy opportunities since these countries are some of the largest producers in the world.
Another Swiss investor, a large family office, told BHA analysts that it is seeking global macro funds focused on emerging markets, specifically Asia and Russia that have exposure to energy and alternative energy, mining, infrastructure, water, agriculture, raw land, and hard commodities. The firm believes that these types of funds offer low correlation to equity markets.
With the current stability in equity markets, many investors seem to be seeking uncorrelated investments, and funds focused on energy and commodities are at the top of their lists.
