The U.K. pension industry may be looking to increase its metals holdings
(Kitco News) - The UK pension market may be set to increase its holdings of precious & base metals
A recent study conducted by NTree International has shown that the massive U.K. pension market ($76bn €62.2bn) could be looking to shift some more of its allocation to the metals markets.
At the moment when asked what percentage of their portfolios should have metals in them, 18% of pension firms said they should hold around 3-5% in precious metals, and 66% said between 5-7%. For industrial metals, 44% said their exposure should be 3-5%, 24% said between 5-7% and 24% said 7-9%. Moving forward as a result of the study, findings also show that over the next 12 months, 64% of UK pension funds expect to go overweight in their allocation to gold, whilst 42% expect to overweight silver.
Founder of Ntree Timothy Harvey said he spoke to 150 EU pension companies with an AUM of $213 billion. He added, only 2% of respondents said they thought gold would fall this year. In base metals, 85% of respondents thought nickel would rise and 80% thought copper would see gains.
The survey had some interesting results as it highlighted that not many pension funds invested base metals in the past and now that they are looking at a "commodities supercycle" they are looking to shift to a 5-7 allocation towards the industry.
When looking at the copper daily chart from 2020 onward it is clear to see why the pension industry would be looking to invest. The question is, have they missed the boat?. Since the March 2020 low of $1.97/lb the price has risen to hit $4.66/lb today. This represents a 136% gain, in the last major bull run between 2008 and 2011 the price rose 270%. This suggests we could have some way to go.