(HedgeCo.Net) A striking development emerging this week: commodity focused funds have overtaken liquid alternatives in global assets under management (AUM)—a reversal not seen since 2012. moneymarketing.co.uk+1
According to Morningstar data cited in industry press, gold’s spectacular rally has powered commodity fund AUM past liquid alts. While new inflows to commodities remain relatively modest, the performance effect alone has tipped the balance. moneymarketing.co.uk+1 In many markets (especially Europe), both asset classes saw net outflows in recent periods, but commodity funds performed strongly enough to overtake. moneymarketing.co.uk
This shift has several implications:
- Relative investor preference: In a world of sticky interest rates and inflation uncertainty, investors seem willing to tilt toward real assets (like gold, energy, agriculture) that carry different inflation hedging properties.
- Competition for capital: Liquid alternative strategies now face stiffer headwinds in attracting flows, especially compared to the momentum of commodity funds.
- Portfolio construction signal: As commodities gain more “share of wallet,” allocators may reassess how they weight diversifiers in portfolios—either elevating commodity exposure or pushing liquid alts to more niche roles.
Still, the commodity overtaking is driven primarily by price action, not sustained flows. Over a medium horizon, liquid alts with compelling risk-adjusted yields and lower volatility profiles still hold appeal for diversifiers. But the event sends a warning: performance trends, not just flows, remain powerful forces in shaping capital allocation.
