Commodities ‘financialisation’ worries end-users

With recent statistics showing an increasing number of financial institutions jumping into commodities, Lianna Brinded investigates whether this will cause more risks to end-users

Alternative investment managers ploughed more pension-fund cash into commodities in 2009 than in the previous year, according to an industry survey, but experts warn that while this may boost liquidity, it could create more risk for end-users.

The increased ‘financialisation’ of the energy and commodities market – referring to securitised commodity-linked instruments that are considered an investment rather than a risk management tool – has caused fears of a negative effect on entities that need