GLOBAL - Pension funds are expected to become increasingly bullish on gold investments following the introduction of an exchange traded fund from the World Gold Council (WGC) early next year.
Investments in gold are generally seen as a cumbersome and tedious process as it requires a different set of specialists from other asset classes, explained Robert Weinberg, managing director, institutional investment, WGC.
The problem is compounded by a lack of willingness by mainstream consultants to take gold research on board, he said.
“We are looking to educate fund managers while at the same time are planning to demonstrate that investments in gold can be viable and cost efficient,” Weinberg added.
Eva Humbro, natural resources fund manager at Merrill Lynch Investment Managers (MLIM) UK, conceded that current institutional asset allocation to gold and other metals was still close to zero.
Institutional interest in Merrill’s $2.5bn gold fund and $1.2bn mining fund was also minimal, he said.
MLIM is banking on a bullish trend in China to maintain investor interest in commodities and has invested in a range of companies supplying products to China.
“The Chinese economy is growing fast but the demand for commodities with which to supply the products and services demanded by a richer population is growing faster. Although there will be bumps along the way the long term trend is clear,” said Humbro.
“Even the world’s largest mining companies, typically very conservative commentators are beginning to believe that the China story could reverse the 30 year run of real price decline in commodities.”
Graham Birch, head of MLIM natural resources team UK, said: “Chinese demand for commodities is revolutionising global commodities markets. China has already overtaken the USA as the largest consumer of iron ore, steel and copper.”
Meanwhile in its China outlook, Schroder Investment Management said: “Fuelled by strong Q3 GDP (gross domestic product) growth, the commodities and building materials were pushed to higher levels as investors expected raw material demand would benefit from the continuous booming China's economy.”
PwC, KPMG, EY and Deloitte must break up their consultancy and audit businesses into distinct firms to provide greater focus on the "most challenging and objective audits", the competition watchdog has said.
The Department for Work and Pensions (DWP) has released its first batch of guidance setting out how the guaranteed minimum pension (GMP) conversion legislation may be used to resolve unequal payments.
This week's top stories include the government spending £800,000 on a Gogglebox advert and MPs writing to The Pensions Regulator about its engagement with the Railways Pension Scheme.