Money that was invested in oil futures is chasing better returns in metals, spurred by increases in copper and gold prices, a fund manager told Reuters.
Funds which follow price trends cannot ignore the contrast between oil, which has been range-bound for months, and metals, which have shot up, Paul Mulvaney, founder and chief investment officer of Mulvaney Capital Management, said in an interview.
"The Mulvaney Capital Global Diversified Program has moved money out of oil and it has moved money into metals, but it is not simply a case of moving money from one position to another," he said.
"Oil trended strongly to August 2005, but has been range-bound since, whereas there is an ongoing rally in metals and our system concentrates positions in the most active trends."
His fund, which has more than $130 million under management and around 60 percent exposure to commodities, may not be alone in doing this, he reckoned.
"It's quite plausible that at some level everyone is a trend-follower. In my experience investors do try to chase performance."
After peaking at almost $70 per barrel in late August 2005, US light crude futures were around $68 in mid-April. By contrast the London Metal Exchange's three-month copper contract rose from $3,600 a tonne in late August to around $6,000 in April.
Futures of materials including oil, copper and gold have been heavily bought for profit-making purposes by fund managers diversifying into commodities from traditional assets such as equities and bonds.
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