LONDON (Reuters) – Some passive investors in commodity indexes are looking to new strategies to produce returns that are driven more by market fundamentals than by investor flows, making them less vulnerable to crowding.

Index funds are popular with pension schemes that do not have the governance structure to invest actively in commodities, but some of the most popular and simple strategies have become the victims of their own success.

LONDON (Reuters) – Henderson is raising its investments in auto makers and energy companies in its TR Pacific Investment Trust, believing Asian consumer demand and economic growth will continue to rise.

“The growth of the consumer in Asia is a well-worn theme but there are still plenty of stocks out there that haven’t been re-rated by the markets and offer interesting value,” said Andrew Beal, manager of the trust, which has some 380 million pounds under management.

LONDON (Reuters) – Alliance Trust Asset Management is adding some bank debt in its bond fund, managers say, believing government support will continue, and has also been trading tactically in peripheral eurozone bank debt.

The company’s four-strong fixed income team, which left Scottish Widows Investment Partnership in 2009 to develop bond products for UK-based Alliance Trust (ATST.L: Quote, Profile, Research), has been buying subordinated debt in the strongest banks in the view that valuations are still attractive.

LONDON (Reuters) – UK fund manager M&G is targeting asset-backed securities (ABS) such as UK and Dutch mortgage backed debt for pension portfolios, as they offer returns on a par with A-rated corporate bonds, with better security.

This approach bucks a trend amongst bond investors who are chasing popular investment grade and high-yield corporate credit, but mostly shunning ABS, still stigmatised by the sub-prime housing sector meltdown that triggered the global financial crisis in 2007.

LONDON, Nov 12 (Reuters) – Fund managers need to create
infrastructure products that better satisfy pension funds’
desire for long-term stable income, said Knut Kjaer, a top
adviser to multi-billion euro national pension schemes.

Investment in infrastructure such as power stations, water
treatment plants, airports and toll roads could provide decades
of inflation-linked revenue for pension funds, but suitable
products are limited.