West Capital Management has invested in the PIMCO Commodity Real Return Fund but is concerned the fund may take a tumble when China's current construction frenzy slows. The PIMCO strategy is benchmarked to the Dow Jones-AIG Commodity Index and combines positions in commodity-linked derivatives with a portfolio of inflation-indexed securities.
John Fulton, a partner with the boutique wealth management firm in Philadelphia, said the fund is up 12% year-to-date and many market players peg the success of the commodities market on China's exponential growth. He said once development in China slows there could be a serious decline in commodities prices, causing the fund strategy to under-perform.
