Reuters first as CalSTRS staff urges $2.5 bln in commodities investment

THE commodities story of the last decade, and probably the one to come, has been the financialization of the market, largely due to significant asset allocations by passive investors who buy and hold and hold and hold. Will it continue? The No. 2 U.S. pension fund certainly seems to be saying yes, and Reuters for the first time on Sept 23 put a sum on that investment: up to $2.5 billion in three years, according to a proposal put to the Calstrs board. While everyone had reported their interest in branching into commodities, as larger peer Calpers has done, this was the first story to say how much it might invest. It came one day after data showing that overall investment in the sector had fallen last month, and amid months of debate over whether increasingly correlated returns and punitive contango rolls would turn institutional investors off the market entirely.