High commodity prices boon for pensions

WASHINGTON, July 7 (UPI) -- Soaring fuel prices may be busting U.S. consumers' travel budget but they're boosting returns on pension fund investments, analysts said.

California's public employees' pension fund invested $1.1 billion in oil and other commodities for the first time last year -- and has jumped 68 percent in value, The Washington Post reported. Fairfax County, Va., pension managers watched their investments grow 61 percent during the past 12 months.

"Our commodity investment has really helped," Robert Mears, executive director of Fairfax County's Retirement Administration Agency, told the Post. "This year would have been a lot worse."

Record prices for commodities -- among them, oil, precious metals, corn and uranium -- are luring pension investments and helping to drive up prices, analysts told the Post.

Pension funds, along with speculators, increased their commodity allocations sharply since 2003, from $13 billion to $260 billion, the Post said. Just how much pension investments are involved in commodities trading isn't known, industry analysts said.

The shift to commodities can be traced to the 2001 stock market crash, analysts said. Fund managers realized they needed more diversified portfolios that would perform well and new financial products simplified trading, the Post reported.