Commodities still 'on life support' as rally flatters to deceive

clock • 2 min read

Asset allocators are refusing to be swayed by a recent rally in commodity prices, saying the bounce is far from sustainable for a sector which remains "on life support".

The price of Brent crude oil dropped from $114 a barrel last summer to below $46 in early January, but has since rallied to above $62. Commodities portfolios have mirrored that rise: some resources funds have rebounded 8% since Brent's low on 13 January, according to FE. However, fund of funds managers say they are not tempted to view resource funds' short-term rebound as the start of a more significant recovery for the sector. Gary Potter, head of multi-manager at F&C, said commodity portfolios are still in critical condition. "Commodities have had a wonderful ten years, but the s...

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