View more on these topics

The race for base

There is now a huge increase in demand for nearly all commodities, especially oil, base metals, gold and soft commodities.

The main reason for this is the substantial requirement to support economic growth in emerging markets such as China. There are also dwindling supplies of many commodities.

This trend is also being exacerbated by a lack of investment in increasing production so it looks likely that the prices of most commodities will rise and rise but there will be temporary dips as well.

While gold does not have many industrial uses, demand from the increasing middle classes in emerging economies is growing faster than gold production itself. Platinum and silver as well as some other base metals such as palladium are also in strong demand.

The oil price is likely to continue to rise because oil companies cannot increase their production fast enough to cope with the requirements of countries such as China and India as well as the US.

There is considerable demand for food products from China, where the middle classes are demanding more variety of foodstuffs as domestic production is not increa- sing nearly fast enough.

The two fairly well diver-sified funds I like are JPM Natural Resources, which returned over 159 per cent over three years to January 1, 2008 and over 10 years no less than 594 per cent.

The other fund, First State Natural Resources, has been around less than 10 years but over three years to January 1, 2008 has returned 154 per cent.

The two funds are widely spread, both geographically as well as between gold, energy shares and base metals with some exposure to diamonds and soft commodities.

I also like pure gold funds, Merrill Lynch Gold & General and the Craton Capital Precious Metal fund in particular.

Recommended

Crosby to chair crunch group

The Treasury has appointed FSA deputy chairman and former HBOS chief executive Sir James Crosby to chair a working group looking at the credit crunch.

7IM adds passives to range

Seven Investment Management has introduced a range of risk-graded funds of funds that use passive investments such as exchange-traded funds rather than actively managed funds.

Leaman to leave ABI

The Association of British Insurers director of corporate affairs Alan Leaman is set to leave the trade body in the summer to head up the Management Consultancies Association.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com