NEW YORK - Commodities, the worst performing asset in the past 10 years, could rise 30% to 40% over the next three years, predicts Barton M. Biggs, chairman of Morgan Stanley Asset Management, in a publication for clients.
"In an investment environment where the other pickings may be slim, this is a real return worth capturing if you can find an investment vehicle to accommodate you that doesn't hog too much of the gain for itself," he suggests.
But, he says, as a group commodities "have such a low long-term return there is not much of a case for big money to include them as an (investible) asset category." An investor would have wanted to have been in commodities only about 20% of the time this century, he says.
"That's not much, and the investment vehicles are relatively small and illiquid, so I don't think large institutions should seriously consider them. For hedge funds and other aggressive investors who believe they can trade individual commodities, it's an entirely different matter."
Commodities returned -3.6% over the last five years and -1.1% over the last 10 years.