Pension funds are going overweight in copper as inflation climbs
Most pension funds believe copper will become a more attractive investment and prices will rise during the remainder of this year, according to new research, shared with City A.M. this morning.
Long known for its strong relationship with global economic activity, copper is fast becoming an indispensable commodity which is oiling global growth in green energy.
In fact, 81 per cent of pension funds think that rising inflation and economic growth will make copper a more appealing metal for professional investors, with almost half looking to overweight their exposure to copper.
This ompares to 21 per cent who expect to be underweight over the next 12 months, according to a survey among 150 European pension funds with a combined AUM of $213bn, which was carried out by Global Palladium Fund, a provider of industrial and precious metal Exchange Traded Commodities.
Price
When it comes to what institutional investors expect to happen to the price of copper, 17 per cent expect it to end the year up to 3 per cent higher than its value mid-April.
Some 45 per cent said they anticipate it will be between 3 per cent and 9 per cent higher, and 37 per cent think it will end the year above this.
“Copper prices are positively correlated to inflation, and it is one of the best performing assets during inflationary periods,” said Alexander Stoyanov, GPF’s chief executive.
“Strong economic growth is fuelling demand for the metal, and cleantech and renewables projects, as well as infrastructure development, represent significant growth opportunities for copper,” he added.