The commodities super cycle has “mostly ended,” while investors may still be able to find profits in raw materials, said Berdibek Ahmedov of Pacific Investment Management Co.
Prices for spot commodities probably will rise in line with inflation, Ahmedov, a senior vice president and real return product manager for PIMCO Europe Ltd., said today in a speech in London. Inflation expectations are becoming “more and more volatile,” and commodities are still beneficial as a hedge, he said. Investors also may profit by buying and rolling contracts closest to delivery in backwardated markets such as oil, where prices are declining into the future, he said.
“The end of the super cycle doesn’t mean negative returns for commodities,” Ahmedov said in an interview after his speech. “There is still a role for commodities in investment portfolios.”
The Standard & Poor’s GSCI gauge of 24 raw materials rallied to a record in 2008 and has more than doubled in the past decade. The index is little changed this year, as gold heads for its first annual loss since 2000 and corn and copper dropped amid rebounding supply.
“There has been a true supply response in commodities,” Ahmedov said in his speech. “We agree that the super cycle has largely ended.”
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