RCM sees inflation shield in commodities

LONDON Wed Mar 9, 2011 7:24pm GMT

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LONDON (Reuters) - Equity manager RCM plans to increase its range of commodity-focused funds as investors look to rising raw material prices as a means to protect their wealth against high inflation, its investment chief said.

Andreas Utermann, who is responsible for global strategy at the Allianz Global Investors (ALVG.DE) unit, sees rising inflation and continued strong economic growth in emerging markets as dominant themes for 2011.

"If you look at those themes, obviously commodities play a role because they are very important in the development of emerging markets, for the dynamics of reflation of the world economies," he said in an interview.

Rising food and fuel prices -- caused in part by adverse weather in some grain producing regions as well as fears over oil supply stemming from popular unrest in North Africa and the Arab world -- has pushed up inflation and eroded the buying power of investors.

Meanwhile, alongside these supply problems, raw materials prices are being boosted even further by rising demand from resource-hungry developing economies, adding to a perception of commodities as an asset class that can outpace inflation.

Anticipating an increase in demand for commodities-related investment products as investors fret about rising prices eroding the value of their deposits, RCM is planning a series of new product launches, Uterman said.

"Overall from an asset class perspective, you are better off with a risk-on structure, away from bonds and particularly away from medium to long term maturities because they do not compensate for inflation," Utermann said.

RCM has won a Lipper accolade for the Allianz RCM Europe Equity Growth, which outperformed peers by 10.8 percentage points in the year to end February, returning 27.8 percent, according to Lipper Global data.

The fund is managed by Thorsten Winkelmann and had $221 million under management at the end of February, Lipper data shows.

Utermann told Reuters in December that he expected global equities to gain up to 12 percent this year and that emerging markets currencies will appreciate as well

RCM will continue its expansion in products that seek to make money from falling as well as rising stocks, known as 'long-short'.

"(This) is not only prompted by the client, it is also a conviction of ours that is one of the ways you optimally capture the (outperformance) available in the market. If you do not short, you potentially leave a lot of money on the table," he said.

(Editing by Chris Vellacott and Mike Nesbit)