Alternative investment management company Dighton Capital Management
says commodities have a bright five years ahead of them whereas
equities are set to fall.
Dighton, which specialises in managed futures, claims there will be
greater demand for commodities in the coming years due to pressure
from emerging markets and interest from developed economies in real
assets.
By contrast, Dighton envisages a rougher period for equities markets
as the consequences of quantitative easing and true economic situation
of developed countries become clear.
"Fears over the real value of money resulting from excessive
quantitative easing and consistent devaluing of currencies by many
countries will drive up prices of precious metals while growing demand
from emerging market economies will raise prices of base metals, soft
commodities and oil," it said.
Alex Moiseev, chief investment officer for Dighton Capital Management,
adds that fear of the unknown could also damage investing in equities
in emerging markets. "Equities in some emerging markets do offer
potential but they represent unknown territory because of the
political factors," he said.
By contrast, lifestyle changes in emerging markets are set to drive up
demand for commodities faster than production levels can meet it.
"This is particularly true of oil, which I expect will go to $200 a
barrel or more in the next two or three years. The ongoing devaluation
of the dollar will only support nominal prices of oil and other
commodities," Moiseev said.
"In such an environment, investors should be looking to asset managers
who can trade long and short across all the asset classes, and
especially those who can effectively exploit the bull run in
commodities," he claimed.
Although equities did well in 2010 and this success is likely to
continue in the short term, Dighton attributes the rally to
inflationary pressures rather than real economic growth. "Quantitative
easing is merely postponing the emergence of real structural economic
problems," it said.
"The failure of the S&P 500 to consistently breach the 1500 barrier
will then lead to an eventual sell-off in US equities in the medium
term that will hit stockmarkets around the world," it added.
Dighton Capital Management was established in 2003 and has $230m
assets under management. It offers alternative investment products to
institutional and private investors and has offices in the US,
Switzerland and the Cayman Islands.
Source: HedgeFundsReview.Com
