Commodities: The new UCITS frontier
Mon Aug 22, 2011
UCITS-compliant funds are unable to invest directly in commodities. However, global economic turbulence has resulted in gold reaching historical highs and an increasing interest in the sector which is often seen as an inflation hedge. Joy Dunbar, editor of Absolute UCITS, explains how alternative asset managers are getting commodity exposure using the UCITS wrapper and how funds tackle tracking error.
Global economic meltdowns have often resulted in commodities
being considered an attractive investment strategy. After all
people will always need soft commodities like coffee, cocoa,
sugar, corn, wheat, soya and fruit.
On the other end of the spectrum hard commodities like metals,
chemicals and petroleum are also necessary for our day-to-day
lives whether it be for travel, components in mobile phones or
the materials needed for building homes and skyscrapers.
The spotlight has increased on commodities because of
increased fears and volatility in western economies due to te
sovereign debt problem in the eurozone as well as the colossal
debt crises in the US and other developed economies.
This has been highlighted by investors fleeing to gold
– which hit an all-time record high at $1,861 an ounce
on 19 August 2011 – in a week when there were fears
about the lack of global growth, the economic slowdown
ISSN: 2151-1845 / CDC10004H
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