Investors are focusing on fundamental strategies to generate benchmark beating returns as the correlation between commodities and other asset classes breaks down, as a new survey from Credit Suisse finds reveals.
Credit Suisse conducted the survey as part of its third annual New York City Commodities Day on Tuesday, June 25, attracting about 300 clients covering a wide cross section of hedge funds, institutional investors, distributors and mutual funds to showcase the bank's competitive differentiation in areas ranging from energy and metals to investor products and business servicing.
"To have this kind of turnout on a day during a week of extreme market turbulence is a testament to Credit Suisse's ability to deliver the type of products and thought leadership that top investors are looking for," said Oscar Bleetstein, Head of Americas Institutional Sales for Commodities at Credit Suisse. "The market is in a sea change and across the bank we're providing investors with new products to meet the challenge."
The survey found that 42% of investors said they see fundamentally based directional trading as the best way to generate pure long-short alpha, the goal identified by half those polled as their rationale for investing in commodities.
About half of those asked said they expect commodities prices to maintain current levels or rise in the coming 12 months. While that's in line with predictions from last year's CS Commodities Day survey, far fewer this year expect prices to jump by 10% or more as the "fear premium" dissipates, Bleetstein said.
Among other results of the survey:
- 53% expect volatility to be higher in the coming 12 months than it was in the past 12 months.
- 46% of investors polled think we've seen the peak in crude oil prices
- 40% identified themselves as currently "underweight" commodities.