The Savvy Investor Commodity Markets outlook section contains current and historical articles, and white paper research on the outlook and analysis of commodities markets from the institutional asset allocator’s point of view.
Commodities are physical, tangible assets known as real assets, that are usually traded on an exchange either for immediate delivery (“spot”) or for a delivery date in the future. For investment purposes, commodities will usually fall into three classifications and be represented by the following products:
- Agricultural – grains and oilseeds (e.g. wheat and soy), livestock, dairy, lumber, softs (e.g. cocoa and coffee) and biofuels.
- Energy – crude oil, natural gas, gasoline, petrochemicals, ethanol, coal and electricity.
- Metals – precious (e.g. gold and silver), base (e.g. copper and aluminium), ferrous and others.
Functioning commodity markets are crucial to the global economy’s overall supply chain and it is imperative that commodity producers and consumers can offset their production and consumption risk by being able to sell and buy in a global marketplace. From an investment perspective, one main benefit received from the inclusion of commodity-based investments within a modern portfolio is improved diversification. Although, commodity-based investments will typically yield no income, additional alpha can be generated from their inclusion at opportune times.
Since the USD acts as the world reserve currency, most commodities will price and settle in dollars, although some emerging market economies such as China have introduced Yuan-denominated oil products recently. Any movement away from USD commodity pricing would be significant for institutional investors and this is a facet of the commodity markets that our research providers will monitor. Today, institutional investors have the flexibility to represent commodity investment exposure for clients via ETFs, collective funds or hedge fund strategies – all with a hedged or non-hedged USD currency overlay.
Areas of commodity research and investment white papers published by Savvy Investor include the outlook for gold and precious metals such as silver, platinum and palladium; the outlook for soft commodities; the oil price outlook and OPEC analysis as well the broader energy markets such as coal, natural gas and shale. We also include articles and white paper research on power and electricity markets including uranium and the nuclear investment case. Research on investment in agricultural markets also features.
Our partner research covers white papers on subjects such as factor investing within the commodities space, analysis of supply and demand drivers within commodity markets, the impact of central banks’ purchases of gold, geopolitical influence on commodities as well as commodity cycles and their seasonal variations.
Noteworthy articles and white paper research from our partners that may be of interest to Savvy Investor members include:
- Oil in 3D: The Demand Outlook to 2050 - Barclays
- A Factor-Based Approach to Diversifying Oil Exposure - Invesco
- Agricultural Outlook 2018-2027 - OECD
- Gold as a Strategic Asset - World Gold Council
- The Role of Commodities During Periods of Unexpected Inflation - Parametric
- The Nuclear Option: Does a Decarbonising World need Atomic Energy - LGIM