Commodity Assets Rebound
The resurgence of investor confidence in the asset type was also seen in data collected by Citibank, showing commodity linked assets under management (AUM) increased 10.25 per cent in the first quarter to $394 billion. While the amount is way below the recent high figure of $555 billion in April 2011, the climb is substantial, analyst Aakash Doshi stated. "The across the board first quarter increase in market valuation of index, ETP (exchange traded products) and actively managed investments totalling $37 billion does confirm the sharp turnaround for commodities last year after shedding 22 per cent in AUM during 2017," he noted. Many investors had avoided commodities in previous years because of poor performance and also because the sector was impacted by macroeconomic activities, moving along with other assets.
With global economy recovering, commodities have proceeded along with their own pace, affected more by supply demand fundamentals and once more incorporating variety into portfolios. Investment banks in Wall Street often do not break down their commodity revenue, choosing to refer to it as within the wider fixed income, currency and commodities (FICC) classification. Commodities were the lone sub sector posting a rise within FICC, but it was not sufficient to prevent FICC revenues from dipping 16 per cent to $22 billion, Coalition reported. Banks' commodities revenue had been continually decreasing in recent years as some institutions diminished investments and others closed commodities units, affected by more stringent legal regulation and steeper capital stipulations after the worldwide financial meltdown. The top banks' commodities revenue amounted to $4.5 billion last year, below a third of the $14.1 billion they attained back in 2008 at the peak of the commodities explosion.
British bank Barclays became the newest financial institution to exit last month, when it divulged its plan to stop most of its commodities trading operations. JPMorgan Chase has divested its physical commodities group, while Deutsche Bank all but left commodities trading last year.
Coalition monitors the following banks:
Morgan Stanley and