VIEW-Castlestone positive to commodities

LONDON (Reuters) - Alternative asset manager Castlestone Management said lower commodity prices create buying opportunities for long-term investors and it is taking advantage of the global economic downturn to expand.

"You want to be expanding in a downturn so you can catch the next ride up," Dugald Ross, portfolio manager at Castlestone Management, told Reuters on Friday.

The fund has taken on a full sales team covering Britain, added marketing staff and is expanding into the Nordic region.

The boutique fund manager has $700 million (456 million pounds) in assets under management with six funds giving the investor direct exposure to commodities, as opposed to commodity exposure through equities.

A global economic downturn, with forced liquidation in the hunt for access to cash, has pushed prices for equities and several commodities down this year.

"Most market cycles last around 18 months on average, we are 13 months into this...it will turn around," Ross said.

He said the long-term story in commodities had not changed from July, when metals such as copper and aluminium recorded new highs. But prices are down 50-60 percent since then.

"It is the developed world that is causing the problems at the moment...but the reality is there is no more land being produced...the world population is still growing," he said.

Once the market turned around commodities would do better on average than equities, Ross said, recommending investors to allocate 8 to 15 percent of their portfolios to commodities.