WEST PALM BEACH, FL (HEDGECO.NET) – State Street Global Advisors [SSGA] has unveiled two new commodity related investment vehicles. The first fund will be tracking the Goldman Sachs Commodity Index[GSCI], and the second vehicle will be an actively managed fund, which will be introduced to investors soon according to news reports. Minimum investment requirements and fee structure were notimmediately available.
Such launchings come amidst surges in commodity prices, which have hit a 13-year high. Some commodity analysts think the time is right for a bull market in commodities; recently oil has risen to about $40 per barrel. According to one of the SSGA managers, Alistair Lowe, the introduction of these new asset classes is a direct response to investor demand from across the world. Mr. Lowe is the head of asset allocation at SSGA.
Another manager, Heather Shermilt, head of global marketing for the Goldman Sachs Commodity Index said, there is strong and growing institutional interest in commodity instruments. According to Ms. Shemilt, assets in the commodity index being tracked by her company, has grown from about US $12 billion in the year 2000, to about US $20 billion today.
According to Ms. Shermilt, such assets will see further growth in the future. Increasing numbers of pension fund consultants and managers have indicated growing interests in commodity investment funds. As the global economy continues to evolve, following about 20 years of what economists call �disinflation� which literally suppressed commodity prices, there are now growing number of economists who predict that inflation may be on the way back. The US Federal Reserve may be changing its neutral bias for interest rates, in favor of an interest rate hike in the coming months. Such expectations may help to continue to push commodity prices further up, some market analysts say.
Other analysts think the new investor interest in commodities is a defensive posture, a way of diversification and protection of their assets. The new commodity funds being introduced by State Street Global Advisors undoubtedly is aiming to take advantage of the new emerging investor interest in commodity investment instruments. Commodity analysts also think that commodity funds do not only rely on price increases to make money, all they need is volatility swings in commodity prices. Commodity portfolio managers will often shift exposures to profit from such trends.
SSGA is one of the largest asset managers in the world, overseeing about US $1,000 billion of investor assets.
Paul Oranika
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HedgeCo.Net
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