Strategies
Commodities
Precious metals, energy and agricultural exposure.
The typical shape of this kind of investment over time. An illustration, not a forecast.
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Overview
Commodities are raw materials such as gold, oil, industrial metals and agricultural products. They can be accessed through physical holdings, funds or futures-based products.
Prices are driven by supply, demand, currencies and geopolitics, and commodities pay no income, so returns depend entirely on price moves. They are often used to diversify a portfolio and as a hedge against inflation, but can be very volatile.
Typical structure
Exposure gained through a fund, note or futures-based product tracking the price of a metal, energy or agricultural commodity, with no income paid.
Illustrative, to explain the general shape of this asset class. Individual products vary, and each carries its own terms.
Who it may suit
- Investors seeking diversification from equities and bonds
- Those who want a potential inflation hedge
- Investors comfortable with price volatility and no income
Typical characteristics
- Liquidity
- Generally high
- Typical horizon
- Flexible
- Role in a portfolio
- Diversification and inflation hedge
- Typical risk range
- 5–6 of 7
- Typical minimum
- $25,000
Key risks
- Price volatility, including sharp and prolonged falls
- No income: returns come only from changes in price
- Futures-based products can lose value through roll costs and can differ from spot prices
- Sensitivity to currency moves, geopolitics and supply shocks
- Storage, custody and counterparty risks for physical holdings
This is a summary, not a full list. See the Risk Warning and each product's offering documents.
How it appears in your portfolio
Shown with a capital-growth projection at an assumed annual rate. Commodity prices are far less smooth in practice, so treat the line as a simplification.
Further reading
Events that moved commodities
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