COVER STORY Comm
Between a rock and a hard place
The rationale for investing in commodities has always been sound : there is a finite amount of natural resources , but a growing world population and a ballooning middle class with a thirst to consume in ever greater amounts . By investing in the miners of vital commodities , you will – eventually – benefit from a supply / demand imbalance that forces up prices . The key word is “ eventually ”, one that investors in commodity funds will have heard from the managers of these vehicles time and time again over the past decade . Years of oversupply as miners raced to cash in on the commodities supercycle in the first 10 years of the millennium came to a head after the financial crisis as prices of natural resources crashed . And many of them have only just broken even . But while commodities now appear to be on an upward trend , why should investors tie themselves to a sector that can go a decade without making any money , rather than , for example , quality companies that are capable of delivering returns in all market conditions ? Charlie Parker , managing director at Albemarle , says the main reason to hold commodities is “ you can make a lot of money from them during the early periods of an economic
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Source : FE Analytics
Performance of in
Bloomberg Commodity Spot ( 419.1 %)
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