Investors keep pouring cash into commodities, unaffected by the record prices, U.S. regulatory changes and the unusual structure of the oil market. In fact, in 2006 commodities are set to hit $3.5 billion, Reuters reports.
"Continuity is really the story here," said Matthew Schwab, managing director of AIG Financial Products Corp. "Over the first three months of the year, investors have continued to allocate funds at roughly the same pace that has prevailed over the past 12 months," he said.
Monthly inflows into the U.S. commodity-linked mutual funds were about $300 million, and if this continues throughout the year, the growth would surpass $3.5 billion.
Some analysts say that the regulatory changes have only had a temporary negative impact on commodity investments. However, PIMCO, which offers largest of all U.S. commodity-linked mutual funds, reports that flows have continued to be strong.
Last December, the IRS issued a tax ruling that limits the amount of swaps for accessing commodity indexes and due to this, some of the top mutual funds have switched to structured notes.
"In our transition from swaps to structured notes, it's business as usual," said PIMCO VP Bob Greer.