Investing In Commodities
ETF Securities Commodities Range
For most investors owning physical commodities is impractical, costly and often complicated. The ETF Securities Commodity range was designed to make it easier for investors to gain exposure to this asset class. Currently through our commodity range investors can gain exposure to:
Gold via the ETFS Physical Gold (GOLD)
Silver via the ETFS Physical Silver (ETPMAG)
Platinum via the ETFS Physical Platinum (ETPMPT)
Palladium via the ETFS Physical Palladium (ETPMPD)
A basket of all four, via the ETFS Precious Metal Basket (ETPMPM)
All of ETF Securities Commodity products are physically backed which means the products are backed by the corresponding amount of physical metal stored in vaults/warehouses and enable investors to gain exposure to spot prices of the metal. Being 100% physically backed means investors have no counterparty exposure to the product issuer and an investor’s holding can be redeemed for physical metal. All storage and insurance costs of the underlying metal are covered by ETF Securities making this one of the lowest cost and most efficient ways to gain exposure to precious metals.
Why Invest in Commodities?
Investors should look to diversify their portfolios across multiple exposure and commodities are an important source of this diversification. In times of increased inflation, equity volatility or geopolitical risk commodities have in the past outperformed most asset classes. Below we analyse the benefits of holding commodities.
As a hedge against inflation
Commodities such as physical gold can provide a hedge against inflation. When inflation increases commodities have picked up and when inflation has been falling we see certain commodities fall, in contrast to both equities and bonds.
Commodities can be one of the most effective tools of diversification available to investors. As traditional assets such as equities and fixed incomes move in price we see low correlation to commodities. Therefore, including commodities such as physical gold as part of a diversified portfolio of equities, fixed income and other assets can a lower the impact of broader market volatility and potentially improve risk adjusted returns over time.
Investing in commodities vs a mining stock
Investing in the physical commodity represents a different investment scenario compared to investing in the mining stock. Look at gold for example. Whilst investing in a gold miner may be a valid investment it cannot be seen as a substitute for an allocation in physical gold. The stock may do well if the commodity performs robustly, its success depends more on how well it is doing as a firm and how much profit they’re making, rather than how underlying commodity prices are doing.
For further information on each of our commodity ETPs please click on the product links below.
NAV - net asset value per unit in Australian dollar.
AUM ($mn) - assets under management (millions) in Australian dollar.
Date - last updated date of NAV and AUM.
PCF - portfolio composition file, only available for equity and cash products
Bar list - metal bar list, only available for metal products