Evaluating commodity exposure opportunities

May 5, 2015

Commodities are raw materials and primary agricultural products that are normally grouped into four broad categories: energy, metals, agriculture, and livestock. Historically, investing in these assets has shown low correlation with more traditional assets like stocks and bonds, which provides diversification potential at the portfolio level. Another important historical benefit is that commodities have offered an effective hedge against inflation.

The bulk of the commodities markets operate with the use of futures contracts, which eliminates the complexity of handling the physical commodities’ exchange, storage, transportation, insurance, etc.