ETFs in this article
Raw materials in this article
by Thomas Strohm, Euro am Sonntag
S.Increasing mobility after the end of the pandemic, an upturn in the economy and huge sums of money invested in infrastructure programs around the world are likely to cause raw material prices to rise this year. Instead of relying on individual markets, investors can also invest in the broad commodity market. While this limits the return opportunities somewhat, it also reduces the risk considerably.
“The broad Bloomberg Commodity Index and the industrial metals and energy sectors took a breather at the end of the first quarter after a sharp rise in prices at the beginning of the year,” explain the investment strategists at the fund provider Swisscanto. Because of the delays in the spread of vaccines and the extension of lockdown measures, demand concerns have spread in the raw materials market. “However, the restriction measures are likely to be relaxed in the coming months, so that mobility and also the demand for raw materials will continue to increase,” say the Swiss experts.
There is a threat of supply deficits
Rising government spending around the world is also fueling the consumption of raw materials. “Despite the high debt levels of the states, investments are made in resource-intensive infrastructure programs in many places,” say the strategists. This applies to a special situation on the supply side. Years of excess capacity have led to underinvestment in a number of raw material sectors, which is why there is a supply deficit for many raw materials. “This mix speaks in favor of rising raw material prices in the near future”, they say at Swisscanto.
Note currency risk
With an ETF from Legal & General (L & G), investors can bet on the Bloomberg Commodity Index. Derivatives market prices from the raw material areas of energy, precious metals, industrial metals, live cattle and agricultural raw materials flow into the barometer. Because the trading currency for commodities is usually the US dollar, investors from the euro area are taking a currency risk. The fee for the L & G All Commodities ETF (ISIN: IE 00B F0B CP6 9) is 0.15 percent per annum.
Agricultural commodities with 33 percent and energy with 30 percent have the largest shares in the portfolio. Precious metals account for 16 percent, industrial metals 15 and livestock 6 percent. The largest single raw materials are gold with a weight of twelve percent, WTI crude oil with nine and natural gas with eight percent.
The L&G fund offers an inexpensive way of bringing the asset class commodities into the depot – and not just relying on gold, but on the whole range.
More news about the gold price
Image sources: iurii / Shutterstock.com, mosista / Shutterstock.com