DWS favors gold, metals, energy

SYDNEY (Reuters) - Farms, food, fuels and metals, both base and precious, should be on every investor's shopping list to hedge against an inflationary spasm that is not about to ease anytime soon, says a DWS fund manager.

Assets to avoid include credit cards and commercial and residential property, where more write-downs are expected, says the mutual fund unit of Deutsche Bank (DBKGn.DE).

"You need to have energy, metals, gold, agriculture within a portfolio," said William Barbour, an investment specialist with DWS Investments in Singapore.

The recommendation is based on historical data from 1972 to 2007.

Barbour said gold is incredibly important and expects its price to continue to rise.

Part of the reason is the United States is likely to have to continue to print money to get out of its current problem, Barbour said.

"The U.S. desperately needs to have some inflation. They don't want deflation because if you have deflation and you have declining property values, people's net worth get eroded quite dramatically," he added.

Another area that appeals to DWS is agriculture and agribusiness.

"It looks like a no-brainer to us," Barbour said.

"Quite frankly, anything involved in the food chain and food business that is appropriately priced will do well," he said.

Energy companies are also attractive, Barbour said, because of the on-going demand for energy.

In addition to those natural hedges, portfolios need to have exposure to the world's new 3 billion of consumers, an area of growth, said the DWS executive.

He is referring to the emerging world of consumers from Russia, China, India, the rest of Asia and Latin America.

Portfolios need to have a focus on companies that can benefit from that growth, whether they are in the emerging world or in developed countries that are setting up plants and factories there, DWS said.

"Most of that growth is going to be in Asia ex-Japan and Latin America," said Barbour.