* Commodities outperform equities for first time in five years
* Uneven performance suggests speculative investment
* Long-term investors see 'real assets' as more compelling
* GRAPHIC: Disparity in long positions - tmsnrt.rs/2kZhPSQ
By Eric Onstad
LONDON, Feb 3 (Reuters) - Hot money has helped commodity markets to outpace shares for the first time in five years, but long-term investors burnt in the previous boom are unlikely to add their considerable muscle to sustain that momentum.
The Thomson Reuters/Core Commodity CRB Index index rose 3.3 percent in the final quarter of last year, against an 0.8 percent gain for the MSCI All World share index .
But fund managers and advisers say there is little evidence that the surging prices are tempting pension funds and other long-term investors to lift commodities allocations, raising the potential for more market volatility.
Recent price swings suggest the outperformance by commodities is largely down to injections from hedge funds and other short-term investors. Quick to buy and quick to withdraw, their speculative forays are the antithesis of stability.
"It's quite difficult to justify a strategic allocation ... for many institutional investors," said Phil Edwards, European director of strategic research at Mercer, which advises 2,487 pension funds and other institutions with a combined $10.17 trillion of assets.
Instead, long-term investors are putting cash in so-called real assets, such as property, infrastructure and shares in natural resource companies rather than the resources themselves.
At first glance, last year's 9.3 percent rise in the 19-commodity Thomson Reuters/Core Commodity CRB Index -- its first annual gain since 2010 -- would suggest a broad-based rally. But such a conclusion fails to take account of the swings induced by short-term investors in different commodities.
Though Guy Wolf, global head of market analytics for broker Marex Spectron, notes that equities have outperformed commodities over a one-year rolling basis every quarter for five years until the last quarter, he argues that the gain is largely down to the hot money.
"Despite some commentary saying that we've already seen some (long-term) asset allocation to commodities, the evidence doesn't really support that," he said.
Wolf pointed to positioning and open-interest data showing that only pockets of commodities are doing well, such as oil and some base metals. If investors were making broad-based allocations, all sectors would be lifted, he said.
Hedge funds and money managers last week lifted bullish positions in U.S. copper contracts to a record level and in U.S. crude oil to their highest since mid-2014.
But in signs that investors are being selective, bullish positions in U.S. gold futures have tumbled about 80 percent since last July to 59,679 contracts and those in U.S. corn have slumped to 20,898 contracts, about a tenth of last June's level.
Concern about inflation, which is rising in the euro zone and the United States, increased the attraction of commodities as a hedge for long-term investors during the boom of the 2000s. But that may not be the case this time around.
"People are wondering about future inflation. They're wondering if this a good time to get back into commodities," said Robert Lang, a managing director with Boston-based Cambridge Associates, which has more than 1,100 institutional clients and $157 billion of assets under advisement.
"But we think global natural resource equities are much more compelling. Commodity futures have several headwinds going against them, such as the negative roll yield."
A roll yield occurs when futures positions are rolled over into forward months before they expire. The yield is negative when forward positions are more expensive than nearby ones.
Last year the negative roll yield eroded 12 percent from returns from the Bloomberg Commodity index, the worst roll yield since 2008, Lang said.
Only 3 percent of European institutional investors last year had a holding in commodities, down from 4 percent the previous year, while a third had stakes in domestic real estate, according to a survey by Mercer of 1,100 investors with assets of 930 billion euros ($998 billion).
"For long-term real money investment, it would be unlikely (to shift to commodities)," said Frances Hudson, global thematic strategist at Standard Life Investments in Edinburgh, which manages 269 billion pounds ($336 billion) and does not have any direct investments in commodities. ($1 = 0.9314 euros) ($1 = 0.8015 pounds)
Editing by David Goodman