GLOBAL - Commodities remain one of the few assets effective as an inflation hedge, but this correlation is diminishing, Amundi Asset Management has said.
The French asset manager pointed out that commodities are necessary to diversify portfolios and to protect against rising inflation.
It said that commodities in emerging markets remained particularly attractive due to a growing population and the high demand for raw materials, agricultural products and energy.
Didier Borowski, Head of Strategy and Economic Research at Amundi told IPE: "We no longer see commodities as an unified asset class but more as a group including several products offering different characteristics.
"The game has completely changed over the last 25 years and the correlation between all the asset classes [including commodities] will probably be completely different in the coming decades."
He added: "We are currently studying each sector within the commodities asset class - from gold to agricultural products and including oil and raw materials - to find out which one is the most adapted for pension funds and their protection against high inflation.
"On the one hand agricultural products seem to offer good opportunities," he said, referencing how they were directly linked to a population's needs. "But on the other hand the financialisation of these products may generate an upward pressure on their prices and, as a result, exacerbate social tensions in emerging economies."
Borowski also said that gold was an asset class in its own right within commodities.
Many investors continue to see gold as a way to hedge a possible 'black swan', he said, used to protect themselves against unexpected events such as financial meltdown, a dollar crisis or tensions in the Middle East.