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London :One of HSBC's most actively managed fund divisions has been reducing its exposure to commodities, expecting a major correction in the high-flying sector.
The $2.7 billion Absolute Return Service, part of HSBC Investments, now holds only around two per cent of its portfolio in commodities, down from a high of around 17 per cent earlier this year.
Charlie Morris, head of absolute return, said commodity prices had risen to unsustainable levels.
"We are waiting for a full on commodity correction," he said, adding that the risk return for investors in commodities was now higher than for equities.
Morris said his division's exposure to commodities was now almost totally restricted to industrial metals. It moved heavily into agricultural commodities such as wheat, corn and soybeans in April last year.
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