Skittish investors withdrew $9.9bn from commodities last month, the largest outflow in years, amid growing concerns about the European debt crisis and China’s growth path.

The estimate of outflows, released by Barclays Capital on Friday, revealed that even institutions with long-term allocation targets were unnerved. The bulk of the net outflow in September, $9.5bn, was from index swaps purchased by pension funds and insurance companies.

This retreat by institutional investors challenges the idea that funds tracking indices are a stabilising force on volatile commodity markets, buying as prices fall and selling when they peak. The argument was commonly heard as US regulators drew up curbs on the largest speculators, which were finalised this week.

In September, the Reuters-Jefferies CRB commodity index fell 13 per cent. Declines were seen across commodities, including gold, copper, crude oil and corn. Equities also fell.

This week the benchmark, which tracks commodities from aluminium to cocoa to crude oil, weakened 1.9 per cent.

The outflow last month was the largest since Barclays began tracking monthly flows in early 2009 and was twice the total net outflow at the height of the 2008 financial crisis, the bank said.

Amrita Sen, commodities analyst at Barclays, said commodities were victims of macroeconomic fears. Even precious metals, touted as a haven, suffered outflows of $500m in September, Barclays reported.

“When you’re in this very macro, risk-on, risk-off environment, all asset classes tend to move together,” she said.

The correlations between equities and commodities present tough questions for investors ploughing money into raw materials to diversify portfolios. This month the International Energy Agency published a note questioning whether commodities were still an asset class in their own right.

Colin Fenton, chief commodities strategist at JPMorgan, said: “Investors globally are very, very pessimistic. As we head into this weekend, there are many doubts and fears about what policymakers are doing in Europe.”

Nevertheless he said fundamental signals, such as freight rates and the downward slope of key oil futures curves, show physical markets are not as weak.

“Pessimism is getting a test. Pessimism, since it’s already in the market, is very vulnerable to risk reversals,” Mr Fenton said.

Douglas Hepworth, director of research at Gresham Investment Management, said investors are “obviously nervous about a US slowdown. They are worried about European contagion. They are still worried about the Chinese inflation fight. But that flows down to all risky assets, equities and commodities alike.”

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