Market News Commodities on the rise |
 |
 |
|
By Genevieve Cua INTEREST in commodities as an asset class has grown tremendously over the last decade. In the mid-1990s, you may be hard-pressed to find an adviser who As the term implies, commodities refer to raw materials that are used in the production of almost everything that we need for daily living. The most prominent investible segments include oil, gold and silver, as well as agricultural resources. The broad commodity types include energy, metals and agriculture. A number of developments in the last decade have underpinned the explosion of interest in commodities. Foremost is an increasing concern about inflation which had actually been declining in the mid-1990s. Recent years have seen heightened commodity supply fears over oil and food in particular, driven partly by geopolitical tensions in the case of oil, and adverse weather in the case of food. The emerging markets' robust growth and consumption of commodities have also fuelled price rises. Inflation concern has also spiked as governments, in particular the US, resort to monetary stimulus as a means to alleviate the crisis conditions of 2008 and to kick-start growth. Near-zero interest rates and 'quantitative easing', however, suggest higher inflation at some point in the future. Apart from inflation, there has also been an intense search for alternative assets that can enhance portfolio returns and help reduce risk. Commodities are often cited as an asset that can fulfil this role. But there is yet another major factor that has driven interest - sheer accessibility. Over the last few years, commodity-linked products have proliferated in both the listed and unlisted space, in the form of exchange traded funds, hedge funds, mutual funds and structured products, among others. Online brokerage platforms also enable individuals to trade commodity futures contracts, an area which used to be mainly the preserve of professional traders.
Authors: Commodities - Yahoo! News Search Results |
