Institutional investors to favour more active, smart beta approach to commodities

Seeking performance while at the same time increasingly needing to control risk makes smart beta thematic index approaches such as low volatility, minimum variance and risk-weighted strategies increasingly appealing to institutional investors allocating back into commodities

Institutional investors want more active strategies

Market-neutral, long-short types of alpha strategies on commodities proved good performers last year as uncertainty and high volatility plagued the market. A better start to the year driven by greater clarity over the sovereign debt crisis in Europe, and hopes for a soft landing in China, in particular, are leading commodity investors to consider investing back into the beta of the market with an increased focus on risk-control techniques.

"Given that most commodities were in contango last year