Institutional investors are looking towards structured commodity products in 2010, according to research from Barclays Capital (BarCap), the investment banking division of Barclays Bank.

The bank surveyed more than 300 attendees at its fifth annual US Commodities Investor Conference last week and reported, 40% of respondents looked to third-party active management when looking at commodity investments next year. But it also found structured commodity products and long-short index strategies showed the largest gains in interest compared to last year, while interest has declined in long-only index investments.

BarCap research suggests a record $60bn was invested in commodities in 2009, and nearly 60% of survey respondents indicated they increased their commodity exposure over the past 12 months. But despite the sizable inflows this year, 63% of those surveyed indicated they plan to increase their commodity exposure over the next three years. 57% of respondents expect the level of commodity inflows in 2010 to be $60 billion or greater.

This strong affirmation of greater portfolio allocation to commodities comes even with investors' tempered views on economic growth and benchmark commodity returns. 61% of respondents expect global GDP growth to be 3% or less in 2010. And three-quarters of those surveyed expect benchmark commodity returns to average 10% or less over the next five years.

While portfolio diversification still drives commodities allocation for many investors, 60% of respondents selected absolute returns as their motivation for commodity investment, more than double the previous year.

Joe Gold, co-head of commodities at Barclays Capital, said: "As our clients add to their commodities allocations and seek favorable absolute returns, the need to be astute in selecting investments is essential.

"To achieve this goal, investors must rely on high-quality research and closely follow market fundamentals."

BarCap has also launched the first European iPath Exchange Traded Notes (iPath ETNs) . The iPath S&P 500 VIX Short-Term FuturesTM ETN and the iPath S&P 500 VIX Mid-Term FuturesTM ETN provide investors with exposure to volatility and are listed on the Frankfurt Stock Exchange (XETRA). The ETNs can be accessed by investors in the UK, Germany and Italy.

iPath ETNs were first launched by Barclays Capital in the US in 2006 and were designed to provide investors with access to the returns of market benchmark indices, less an investor fee. The ETNs are senior, unsecured, unsubordinated debt securities linked to the performance of an underlying index.

Philippe El-Asmar, head of investor solutions at Barclays Capital, said: "We are very excited to bring the iPath ETN platform to investors in Europe. iPath ETNs have been tremendously successful in the US attracting over $5bn in market capitalisation, with over $80bn in volume traded since inception. iPath ETNs provide investors with simple, transparent, cost efficient instruments that provide access to difficult-to-reach markets with the ease of trading through an exchange."

In addition to this launch in Europe, Barclays Capital is cross-listing certain existing iPath ETNs in Canada.