Bloomberg writes that GX pricing data further strengthens {BOIL<GO>} so that Bloomberg Terminal users can access a comprehensive view of spot oil and refined product price assessments that span from the spot market to OTC curves. 

“The refreshed and expanded dataset aggregates over 400 energy prices, including 160 new benchmarks provided by GX, so that customers can see a full view of market activity for key crudes and refined products across geographies. The benchmarks are calculated by GX using trade information from over 150 data providers and are externally audited to IOSCO standards. GX is also authorized by the UK’s FCA as a benchmark administrator.”

Emilie Gallagher, Global Head of Commodities, FX and Macroeconomics at Bloomberg, says: “In the current era of the macro investor, corporations and institutions will need access to global commodities market information and analytics to navigate economic uncertainty, upcoming geo-political events and an energy sector that’s in transition. Our strategic collaboration with General Index will provide Bloomberg Terminal customers with a transparent view of spot oil and refined product benchmarks and build on the foundational aspects of their investment strategy across critical asset classes.”

The GX-powered {BOIL<GO>} prices reflect both evolving trading patterns and well-established commodity pricing points that can be used in contracts and for trading. The 160 new benchmarks utilise market-relevant pricing and span key crudes in the Middle East, Europe and Canada, as well as other oil products in Europe, the Middle East and various Asian markets like Singapore, South Korea, and Japan.

Tickers align with specific regional market closures and follow a tech-based methodology backed by expert oversight. This offers market participants a transparent data solution for their commodities exposure. In addition to the price assessments on the Bloomberg Terminal, customers can access GX data for enterprise use via Bloomberg Data License and Bloomberg’s real-time market data feed, B-PIPE. 

Neil Bradford, Founder and CEO of General Index, says: “We are delighted to continue our strategic partnership with Bloomberg by bringing GX powered energy benchmarks to all Bloomberg Terminal customers through the refreshed and expanded BOIL function. The GX ethos is fair and affordable access to commodity price data, and having Bloomberg share in this vision further strengthens the market’s ability to better utilise the world’s resources.”

Blue gold, otherwise known as water, is fast emerging as the most sought-after resource on the planet. The 2020 forecast indicates that the demand for global freshwater is expected to exceed available supply by 56 per cent by 2030.

As clean freshwater becomes increasingly scarce, with China and India the most at risk, savvy investors are turning their attention to the “blue economy” and this vital commodity, effectively turning water the new gold.

The World Wildlife Fund (WWF) predicts that nearly two-thirds of the world’s population may face water shortages by 2025. Moreover, the UN warns that water scarcity could displace an estimated 700 million people in Africa by 2030.

Yet assuming water scarcity exclusively is a third-world problem would be incorrect. Developed nations like the US and Australia have felt the sting of severe droughts, particularly in states like California and regions like New South Wales. Over the past few decades, the data show that climate change has intensified the water cycle globally, bringing more extreme bouts of wet weather and droughts.

Besides the obvious implications, the looming water crisis has significant ramifications for the global economy and financial markets. The World Bank estimates that climate change and water scarcity could cost up to 10 per cent of some countries’ GDP by 2050, a figure that is driving investors to explore the water sector, looking for promising solutions and the potential for profit. 

According to a report by Bank of America, in 2020, companies reported maximum financial impacts of water risks at USD301 billion, which is astonishingly five times higher than the cost of addressing them (USD55 billion). Beyond risk management, there are also business opportunities when investing in water security and water sanitation. 

Investment funds are not just dipping their toes but diving head-first into the “blue” market. The Invesco Water Resources ETF has seen a surge in interest and now manages assets worth USD1.85 billion. Another compelling case comes from the Asian Infrastructure Investment Bank. Since 2016, it has approved 15 water projects in eight countries, totalling an investment of USD3.9 billion in areas such as flood management, modernisation of irrigation systems and improvement of water supply and sanitation systems. 

As for the particular types of innovation that grab investors’ attention, water-related technology, such as desalination and water recycling, as well as greywater recycling, are also expected to rise, presenting potentially high returns for early investors. Increased investment in water infrastructure, technology, and utilities presents enormous growth opportunities for investors and could reshape the financial markets. Based on potential demand for water supply, the infrastructure sector will become a trillion-dollar industry by 2030.

Overall, financing water is driven by a combination of significant financial opportunity, environmental consciousness, and the recognition of water as a fundamental resource crucial for global development. The escalating water crisis highlights not only the importance of water for life but also its increasing importance for markets and investors. 

The demand-supply gap for water is likely to widen, highlighting the importance of water as a critical resource for both markets and people. We offer three predictions regarding water shortages and investment implications in the near future:

Increasing investment opportunities: As water scarcity becomes more pronounced, the financial markets will face a surge in investment opportunities related to water infrastructure, water treatment technologies, and sustainable water management practices.

Regulatory landscape shifts: Governments and regulatory bodies will shape the water market’s trajectory, with stricter regulations regarding water usage and conservation driving technology adoption and creating investment prospects.

Social and environmental impact investing (ESG): Investors will seek water-related investments that align with their social and environmental values. Impact investing, which integrates financial returns with positive social and environmental outcomes, will gain traction, offering opportunities to support sustainable water practices.

Water scarcity poses challenges to the global economy and financial markets, but it also opens avenues for investment in innovative, sustainable solutions. Recognising water as the new gold allows investors to contribute to responsible water management, address environmental concerns, and tap into the water sector’s growth potential. Just as the pursuit of gold once shaped economies, the quest for water is poised to do the same in the coming years.

The cash-settled contract, based on the West Texas Intermediate (WTI) crude oil benchmark, will represent the most cost-effective way for the retail market to trade the price of crude oil.

FairX CEO Neal Brady says: “We’re excited to broaden our product line with Micro Crude Oil Futures as we continue on our mission to provide the retail sector with around-the-clock, low-cost opportunities to access liquid futures markets. Our partnership with Nodal Clear provides critical risk management to our business model as we expand into this new asset class.”

Nodal Clear, a subsidiary of Nodal Exchange, provides clearing for all FairX contracts.

“Nodal Clear is excited to provide the clearing services to support the launch of FairX Micro Crude Oil Futures, enabling retail access to this significant commodity,” says Paul Cusenza, Chairman & CEO of Nodal Clear.

Boris Ilyevsky, Chief Product and Strategy Officer of FairX, adds: “We’re breaking down the barriers that have kept many individual investors from participating in the futures market and in key sectors like oil by designing our products specifically for them – making them straightforward and easy to understand with low fees and free market data. We’ve listened closely to what retail investors need and believe our products appeal not only to experienced futures traders but to those individuals who have long desired to take positions in markets that have been cost-prohibitive, too large or unnecessarily complex.”

By employing social media analytics in both Arabic and English, alongside QuantCube’s proprietary Natural Language Processing algorithms and a specific dictionary tailored for the crude oil market, the QuantCube Crude Oil Risk Sentiment Indicator is able to accurately capture short-term risks in the market. It processes multiple factors impacting crude oil prices in real time, including OPEC meetings, production and stocks. As a result, the indicator can provide insights several hours in advance of traditional news outlets, giving commodity traders and hedge funds an edge in the market.  
 
“Our Crude Oil Risk Sentiment Indicator is a must-have for clients interested in commodities such as crude oil and is used to derive short term investment signals,” says Thanh-Long Huynh, CEO of QuantCube. “By capturing social media sentiment in Arabic, as well as English, we are analysing more than five times as much data as our nearest competitor and delivering much greater accuracy. The result is derived investment signals that are performing well and generating consistent Alpha.”  
 
Alongside QuantCube’s international and commodity trade indices, powered by AIS Shipping data, the QuantCube Crude Oil Risk Sentiment Indicator provides real-time insights on the supply side for commodity and energy futures traders. When the indicator is also used in combination with QuantCube’s Macroeconomic Intelligence Platform – incorporating real-time macro variable indices for GDP, Consumption, Inflation and Employment – it enables users to assess overall demand trends, and to anticipate economic and trade trends.  
 
The QuantCube Crude Oil Risk Sentiment Indicator is computed over a 24-hour period and refreshed every day. The indicator varies from 0 to 100 and provides information on current social media risk perception for the crude oil market. Investment signals can be derived from the absolute level, as well as from the short-term acceleration, looking at the data over a period of 2-6 days. Readings above 65 are considered very high, and below 35 very low. If the risk is high, the indication is that prices are expected to fall. 
 
“QuantCube carried out a successful pilot of the indicator before launching it to market this month,” says Huynh. “QuantCube has proven success in accurately processing large data sets in different languages using NLP models. We have used NLP techniques to analyse sentiment data to predict the outcome of elections more accurately than the polls.” 

The new technology partnership will enable ProMEX to create new products and markets at speed, and securely offer trading in a wide variety of commodities in new ways.

ProMEX delivers an end to end digital experience in physical commodity trading. The platform provides direct, real-time trading without intermediaries or clearing houses and eliminates settlement risk for its users. This shortened settlement cycle also reduces counterparty risk. Exberry’s matching engine is central to this process.

The way most commodities are currently traded is rather traditional – a bilateral negotiations process which is opaque and inefficient. At the same time, many small and medium size commodity firms and investors are not familiar with risks associated with commodity futures markets. ProMEX brings simplicity and efficiency to trading such commodities, all from an intuitive mobile application.  

ProMEX’s new marketplace is now live  with its first commodity Moutai, the national wine of China. Users can buy, hold, sell, make or take delivery in Moutai, without having to  organize logistics or set up a storage facility.  Users can simply download the app  from their preferred app store to join the platform. ProMEX will develop other physical commodities including “green” products to promote sustainability among the relevant industry users.

The flexible modular structure of Exberry enables clients to rollout marketplaces at speed and global operations to be run from a single location. Exberry’s easy to integrate “Marketplace-as-a-Service” with its matching engine at the heart, allows ProMEX and their users to reap the full benefits of the exchange-grade trading solution, rolling out new services and markets at speed.

Mark Ho, Co-Founder & CEO of ProMEX, says: “Exberry has allowed us to go from idea to working platform in a matter of weeks. The marketplace as a service concept is so well executed that we had a conversation in the morning, and a developer was working on the system that afternoon.”

Commenting on the announcement, Magnus Almqvist, Head of Exchange Development, says: “Collaboration and innovation are fundamental to Exberry, and our native SaaS solution helps bring innovation to the market. We are very excited to work with a visionary firm like ProMEX to create  a new peer-to-peer marketplace with enhanced price discovery solutions.  As ProMEX continues to add new commodities for trading to the platform, Exberry can help them deliver new customer experiences and easily scale as they grow.”

RBC Global Asset Management (RBC GAM) is building its exposure to green infrastructure across its emerging markets equity portfolios, with a focus on renewable energy, electric vehicles, and transmission metals.

Royal Bank of Canada’s asset management arm, which manages more than USD465 billion in assets, wrote in a recent research paper that environmental risks represent “increasing sources of both opportunity and risk” for investors.

“We believe [green infrastructure] is a multi-decade growth story and we want to increase our exposure to this theme across all our portfolios,” says Zeena Dahdaleh, a portfolio manager on the EM team at RBC GAM.

Green infrastructure growth is expected to be driven by ongoing trends including global warming, the impact of climate risks on people’s health, and increasing government focus on green infrastructure, according to RBC GAM.

The research notes that emerging markets are “disproportionately affected by climate change,” with these countries bearing greater physical and financial risks. 

A study from Pictet Asset Management and University of Oxford in 2020 found that Brazil and India could lose up to 60 per cent of their GDP per capita by the end of the century if global warming continues unmitigated.

However, there remains a large funding gap for the clean energy transition in emerging markets, with the International Energy Agency (IEA) saying a seven-fold increase in annual clean-energy investment in developing countries is needed in order for the world to achieve carbon neutrality by 2050.

RBC GAM is focusing on energy consumption. “Energy consumption accounts for 73 per cent of man-made greenhouse gases. Of that 73 per cent, and specifically looking at CO2 emissions, electricity, heating and transport account for the majority of CO2 emissions,” writes Dahdaleh.

Renewable energy, electric vehicles (EV) and transmission metals are the most attractive sectors for investment, according to RBC GAM.

Other sectors such as energy storage, food and agriculture, and hydrogen are “also interesting ways to play the theme and may be key areas to investigate in future” but currently these sectors have “very few investable names.”

Within renewable energy, Dahdaleh highlights the producers of rotor blades for wind turbines as having both high returns and “scope not only to grow their market share domestically but also globally.”

RBC GAM is also considering opportunities in high-quality “pureplay” solar manufacturers in China.

Electric vehicles represents another growth sector, with Goldman Sachs predicting that their portion of total vehicle sales could grow at a compound annual growth rate of 15 per cent over the next few years.

According to RBC GAM, automakers are the “least attractive part of the value chain” in electric vehicles due to low returns and high levels of competition in the market.

RBC GAM is instead looking at opportunities in component manufacturers, including thermal management technology. Electric vehicles expend 20 per cent of their total energy on air conditioning, since they cannot use waste heat from the engine for inside heating as conventional cars do. 

“These companies have pricing power, are high return businesses and will not be exposed to the heavy capex cycle and competitive environment that we see in other parts of the value chain,” says Dahdaleh. 

“We expect the EV heat management market will rise at a CAGR of over 35 per cent for the next four years which is significant growth.”

Battery manufacturers are another area where RBC GAM sees opportunities, with South Korean battery manufacturers currently boasting the largest market share and most advanced technologies.

The final way to play the green infrastructure theme, according to RBC GAM, is through raw materials that will aid the transition to a cleaner energy world. 

“The main challenge to moving away from hydrocarbons is that many alternative raw materials will be required to make the transition, with aluminium and copper at the top of the list,” says Dahdaleh.

RBC prefers aluminium and copper for commodity exposure partly because these companies tend to have a strong focus on ESG factors. 

“The evaluation of ESG practices (for example, water usage, waste management and community relations) is crucial in the metals and mining space and that is something we focus on when looking at the best ways to play this theme,” says Dahdaleh.

World-renowned precious metals retailer and leading voice in commodities news, data, and insights today announce the upcoming launch of Kitco Gold (ticker: KGLD), a gold-backed stablecoin fully backed by physical gold held securely in DirectReserve vaults. It combines the safe-haven benefits of owning physical gold with the flexibility, transparency, affordability, and security of a digital asset.
 
The project is the first major technology adoption from the traditional precious metals and gold sector, launched by a real-metals trading group with over 40 years of history in providing precious metals investment products and services worldwide. 
 
Technology innovation in gold-backed stablecoins has so far been limited and only executed by fintech innovators, but Kitco will tap into their strong institutional investors base who are seeking the digital equivalent of Kitco’s depositories and vaults, audited to the highest industry standards.
 
The launch has been made possible through a consortium of partners with a long history of building institutional trust in traditional and digital assets. First Digital Trust will administer the token while Stably and Tradewind Markets will provide the multi-layers of trust and security to record the gold on the blockchain.   
 
Kitco Gold is an ERC-20 token that will be easily integrated with exchanges, wallets, lending platforms, and other blockchain products and ecosystems. Kitco Gold is fully backed by physical gold held securely in DirectReserve vaults and is tied directly to the real-time market value of the spot gold price. Investors will access the benefits of owning real physical gold with the flexibility, speed, convenience, affordability, and security of a digital asset.
 
“We’ve been looking forward to unveiling Kitco Gold, representing a digital receipt of physical gold ownership, which is digitally spendable. Buyers will be able to access a secure and reliable gold token, the most robust asset class to date. Institutional investors will have a competitive alternative to traditional gold products such as gold ETFs, with the additional benefits of real-time trading and settlement enabled by blockchain technology,” says John Dourekas, Chief Business development officer Kitco Digital Metals Group. “Our mission is to bring the gold-backed asset onto multiple blockchains and ecosystems.”
 
“The Kitco gold partnership brings together a consortium with more than 40 years of legacy history of sourcing, trading and protecting metal and digital assets. This truly-backed gold asset will allow institutional traders to have complete trust in a verified process of gold-value attainment and we look forward to collaborating with the teams to make it a reality,” said Vincent Chok, CEO of First Digital Trust. 
“Trust and verification are hallmarks of a well-functioning market. We are pleased to be applying best practices from other asset markets to make gold as an investment asset more secure, accessible, and cost-efficient,” says Michael Albanese, CEO of Tradewind Markets.

Each token represents one true troy ounce of fine gold. Ownership records for the underlying gold are managed on the Tradewind ledger, an institutional-grade platform that facilitates the trading and management of precious metal commodities. The safe-haven asset will be secured and protected by First Digital Trust, Hong Kong’s only qualified multi-asset custodian, holding both traditional and digital assets.
 
Stably, a public blockchain smart contract provider connecting real-world assets to existing and emerging blockchain ecosystems will enable the asset to become available for purchasing and trading to investors. 
 
“Stably is very pleased that our tokenisation engine is enabling Kitco to bridge precious metals from traditional finance (TradFi) to decentralised finance (DeFi) ecosystems. As the world’s largest precious metal website, Kitco shall benefit immensely from access to these new digital distribution channels,” adds Kory Hoang CEO of Stably Corporation.
 

By Neil Jamieson, head of UK and Ireland Sales at NTree International, a firm specialising in distribution and investor education.

The growth of interest in clean energy investing has been dramatic over the past few years. The number of reports coming out of bodies such as the International Energy Agency provides clear evidence that major economies have embarked on a path away from fossil fuel use to increased use of renewable energy.

In the equity space, there have been some clear winners and losers in terms of investor money flows.  Companies focused on renewable energy have attracted significant interest.  On the other hand, those in the fossil fuel camp have seen some major investors pull out while in some cases also facing pressure from remaining shareholders to reduce carbon emissions and make a meaningful shift towards renewables.  

The challenge for investors looking to make an allocation to energy transition stocks is to identify winners and losers in this unfolding journey, as in the case of Betamax versus VHS the best technologies may not necessarily win.  Reducing stock specific risk by investing in Exchange Traded Funds (ETFs) is a potential option and there is plenty of choice from clean energy through to battery technology and hydrogen ETFs.  It pays to check the index constituents to check to what extent their activities match the name on the bonnet.

An alternative approach for investors to consider is diversification or reduction of equity exposure to the energy transition theme by investing directly in the commodities that are key to delivering clean energy.  Whether a wind power company is a winner or loser, it will need to buy copper, similarly, in the race to win market share in the EV space, the manufacturers of battery packs will need to access nickel and other key materials.

The International Energy Agency in its May 2021 report, The Role of Critical Minerals in Clean Energy Transitions, projects significant growth in minerals demand in 2040 relative to 2020 levels.  In a clean energy technology scenario where the Paris Agreement goals to limit global warming to well below 2 degrees Celsius, are met, their share of total demand rises to over 40 per cent for copper and 60-70 per cent for nickel and cobalt.  In aggregate, it would imply a quadrupling of mineral requirements for clean energy technologies by 2040.  EVs and battery storage would account for about half of the mineral demand growth from the clean energy sector.  By weight, mineral demand in 2040 would be dominated by graphite, copper and nickel.  

A supply side response will be required in order to meet the projected increase in demand for copper and nickel.  This will be far from straightforward, as highlighted in the IEA report.  In the case of copper, the quality of ore bodies is declining, which puts pressure on costs, emissions and waste production.  In addition, mines in South America and Australia are subject to climate and water stress, which further complicate mining operations.  Nickel requires battery-grade Class 1 supply, which is seen by analysts as largely dependent on the success of high-pressure acid leach (HPAL) projects.  These projects are capital intensive and face emissions and tailings challenges, which is also the case for alternative Class 1 supply options such as the conversion of nickel pig iron to nickel matte.  The high level of emissions was one of the principal concerns raised after China’s Tsingshan announced it was using this process.

The question remains as to how fast the supply response will be.  Most likely, there will be a lag in the response given the lead time to identify and develop mines as well as the inevitable delays in completing projects.  CRU, for example, is looking at 5.9 million tonne long-term copper supply gap opening up from the mid-2020s, which could grow larger by 2030.  With the scope for shortages, industrial consumers are moving to secure supplies. In the case of metals needed for electric vehicles, for example, Thomas Schmall, Volkswagen’s board member in charge of technology, told Reuters in June 2021, “We’re all in a race. It’s about making the most affordable cells and you need scale to do that.  Apart from cell manufacturing, which is a new area of business for us, we need to move into vertical integration more strongly, procuring and securing raw materials.”

This may sound exciting, but from an investment point of view, a key question to consider is whether the inclusion of copper and nickel in a diversified portfolio can potentially add value? To provide an answer, the research team at NTree International, using a portfolio optimiser tool, looked at a multi-asset portfolio and then added individually Copper and Nickel to the mix.  The benchmarks used in the simulation include  

Using a 5-year time frame, which reflects the time period over which interest in clean energy and electrification has started to build, exposure to the metals was found to be accretive in terms of improving risk-adjusted returns and positioning a multi-asset portfolio on the efficient frontier.

In the context of the benchmarks used, the commodities index S&P GSCI was found not to add value in terms of risk-adjusted returns.  This should be seen in the context of the 5-year timeframe, a period during which, with the exception of the last 12 months, the prices of many commodities were relatively weak.

From an investor perspective, the portfolio optimiser analysis is helpful because it highlights the potential for nickel and copper to be part of a diversified portfolio.  As with any potential investment and asset allocation decision, each investor needs to understand the potential risks involved and how an investment could serve to enhance overall portfolio performance.  

An investment in commodities can provide portfolio diversification as it is a distinct asset class with a different risk profile to equities and fixed income.  But with commodities, it can pay to be selective. The particular attraction of copper and nickel lies in the fact that they play a critical role in the transition to a clean energy economy, which implies significant incremental demand for these metals in the coming decade.  This has not gone unnoticed by investors.  Recent research from the Global Palladium Fund polling 150 European pension funds found that 49 per cent were looking to overweight copper in the next 12 months.
 

Blockchain platform Lohko has teamed up with London-based tech firm Mattereum to launch a new ownership model of physical goods that will enable verifiable gold non-fungible tokens (NFTs) to be traded on the blockchain and attached to carbon offsets. 

Blockchain platform Lohko has teamed up with London-based tech firm Mattereum to launch a new ownership model of physical goods that will enable verifiable gold non-fungible tokens (NFTs) to be traded on the blockchain and attached to carbon offsets. 

Using the Lohko Wallet, a digital wallet that secures blockchain-based financial assets, investors can now for the first time safely hold, buy, sell or transfer ownership of physical gold bars rather than just owning an IOU. Mattereum’s Asset Passports bind each individually numbered gold bar to an NFT with legally enforceable smart contracts publicly available on the blockchain.

This new ownership model pioneered by Lohko and Mattereum offers a lens into the sustainable and equitable virtual economy of the future. Verifiable digital identities, authentication and provenance of each gold bar creates transparent inventory information, allowing owners to see whether their assets meet ethical environmental and social standards and automatically invest in carbon-offsets.

“Gold’s main limitation as an investment category has been that its ownership is difficult to transfer,” says Dr Antti Saarnio, Lohko’s CEO. “Typically gold buyers don’t have access to secondary markets – NFT gold in blockchain does not have this limitation. NFT gold owners are able to sell their gold anywhere and to anyone in any blockchain marketplace. This is a huge benefit for gold investors providing them better liquidity and higher sales margin.”

Vinay Gupta, founder and CEO of Mattereum, says: “Once you can do gold, the world’s most ancient asset class, you can do anything. Putting gold on the blockchain in a way which provides such excellent protections for the rights of bar owners, across a wide range of possible scenarios, has taken immense effort and will be a real gamechanger. We hope you will feel able to trust the product of our collaboration completely.”

Verifiable gold NFTs will also enable artists to bind premium editions of their digital work to physical gold, collectors to buy and sell securely across marketplaces, and investors to have direct digital-physical ownership. The gold bars held in Lohko Wallets are stored in secure vaults maintained by a Singapore-based gold exchange.

The Mattereum Asset Passport is a third-party verified digital identity for physical assets, stored on the blockchain. They can be assigned to a diverse range of asset classes including fine art, collectibles, luxury goods, aviation parts, consumer electronics, and many more.

The Mattereum Asset Passport bundles legal and digital agreements which denote true ownership of an object while providing secure digital provenance, certificates of authenticity, insurance frameworks, and dispute resolution. These smart legal agreements are cryptographically signed and secured on-chain and stored in distributed storage networks such as IPFS.

Gold NFTs are a new type of non-fungible token for physical assets, or digital twins, that are blockchain tokens denoting digital ownership of a tangible good stored on an immutable ledger.

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As a result, many expect to go overweight in commodities such as precious and industrial metals over the next 12 months.

That’s according to new research by NTree International Ltd, a specialist marketing and distribution, and investor education firm. NTree represents Global Palladium Fund’s range of metals ETCs and China Post Global’s Market Access ETFs in Europe.

with reveals 78 per cent believe that markets have entered a commodity super cycle – a decades-long period during which commodities are predicted to trade above their long-term price trend.   

The study of 50 pension funds with a combined AUM of USD76 billion shows that over the next 12 months, 64 per cent of UK pension funds expect to go overweight in their allocation to gold, whilst 42 per cent expect to overweight silver.  In terms of industrial metals, Platinum Group Metals continue to be an area of interest for investors with 46 per cent of pension funds expecting to go overweight in platinum and 46 per cent expecting to increase their allocation to palladium. 

Base industrial metals are also starting to attract increasing interest with 40 per cent of funds looking to increase their allocation to the nickel whilst 46 per cent are also looking to overweight their exposure to copper.

The study showed that when asked what percentage of their exposure UK institutional pension funds should have to precious metals, 18 per cent said 3-5 per cent, and 66 per cent said between 5-7 per cent. For industrial metals, 44 per cent said their exposure should be 3-5 per cent, 24 per cent said between 5-7 per cent, and 24 per cent said 7-9 per cent.

The research shows that UK pension funds are also likely to increase their exposure to China, a key consumer of commodities and driver of global industrial production – with 44 per cent planning to increase their exposure to Chinese fixed income and 48 per cent to Chinese equities. 

Hamad Ebrahim, Head of Research at NTree, says: “There has been a great deal of speculation about whether or not we are in a commodities super cycle, but our research certainly seems to suggest that many pension funds believe that already.  As a result, they are proactively taking steps to increase their exposure to commodities such as precious and industrial metals which will participate and benefit from long-term economic growth.”

NTree represents Global Palladium Fund (GPF) which has four metal ETCs (gold, silver, palladium and platinum) listed on the Deutsche Börse and London Stock Exchange. They have the lowest charges with total expense ratios (TER) ranging from 0.145 per cent to 0.20 per cent. Targeting Family Offices, wealth managers, institutional and other professional investors, the new physically-backed gold, silver, platinum and palladium ETCs will track the spot price of the respective metals they cover.  

In an industry first, the ETCs use Blockchain technology to record bar information and provides an extra layer of security and transparency.

NTree also represents China Post Global, which promotes a family of innovative Exchange-Traded Funds (ETFs) providing access to commodities and emerging markets through its brand Market Access. Market Access ETFs combine intelligent index selection, optimal replication, transparency and liquidity. They are diversified investment solutions for investors across Europe who use Market Access ETFs to implement their investment strategy in the commodity and emerging markets space.

NTree has set up a dedicated brand, Metal.Digital as an education resource for professional investors with a focus on metals.