Many pension funds have become increasingly fickle in managing commodity investments and are now piling back into the sector after selling off in May, said Marex Spectron, the largest privately owned commodities broker.

A rout in May led to an estimated $60 billion shrinkage in global commodities and energy investments as investors liquidated positions and suffered losses, Gavin Prentice, managing director and head of sales, told Reuters on Monday.

Institutional investors such as pension funds previously tended to hold on to commodity investments as a diversification strategy, but the sharp sell-off in May showed the change in attitude.

"That demonstrates that some of the investors are becoming more fickle. They are moving in and out of a number of these hedge funds, more so than they used to," he said in an interview.

"Money is more fluid, but we've certainly seen over the last month or so a return of interest. Certainly a number of the hedge funds that have good contacts report that money has started flowing back from those quarters, in particular the pension funds."     

The top interest by funds is in precious metals, base metals and energy, in that order, Prentice added. "I think that copper could well surprise a lot of people toward the end of this year or into 2012."     

Benchmark industrial metal copper is due to revisit $10,000 per tonne in the second half and could touch $11,000 early next year, partly fuelled by a campaign to build affordable housing in China, he said.

Copper had shed about 17 percent from its record peak in February when it touched a low of $8,500 in May. It was trading at $9,635 a tonne on Monday afternoon.

As interest in commodity investments rises, Marex has pressed on with its own expansion drive and expects revenues to jump again this year after two major takeovers, Prentice said. - Reuters