In the first quarter of 2008, worldwide investment in commodities surged by over 20 percent to reach the $400 billion mark, as investors fled the U.S. dollar and sought a hedge against inflation, said analysts at Citigroup Inc.
The commodity indexes also enjoyed a healthy bump, as investment in them for the first quarter increased by around $40 billion, to reach $185 billion. That was more than the entire commodity index investment of 2007.
After the indexes, trading advisors were the largest group investing in commodities, as they added $94 billion to the commodities market in the first quarter, over 18 percent since the end of 2007.
Hedge funds were next, accounting for $75 million in commodity holding, an 25 percent increase in the first quarter.
EFTs added another $46 billion to the commodity sector, increasing 31 percent since the end of the year.
Many think the surge is unsustainable, and there will probably be a general pullback over the strong recent quarter. At the same time it could offer opportunity for investors in the overall sector as well.
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