How to invest in raw materials

COMMODITIES ARE raw materials used to create the products consumers buy, from food to furniture, and from oil to precious metals such as gold and silver.

Investing in commodities was once considered the realm of specialist investors, but the soaring bull market of the last few years combined with the number of commodity products now available to Irish investors means that commodities as an investment have grown in popularity.

Ciaran Bristow, chief investment officer with Irish Life Investment Managers, recommends that commodities represent around 5 per cent of an investors portfolio.

A number of Irish fund managers now offer commodity products to Irish retail investors, such as Eagle Stars Global Commodities Fund, which is based on the SP GSCI, the premier global commodity benchmark, comparable to the SP 500 or FT equity indices. Investors can access the fund through the Eagle Star Investment Bond (Matrix Funds) or the Eagle Star Savings Plus (Matrix Funds).

The investment bond is a lump-sum investment product with a minimum investment of €5,000 and the savings plus is a regular savings plan with a minimum regular investment of €50 per month.

The Irish Life Commodities Fund also tracks global indices, in its case a 50/50 mix of the GSCI and the Goldman Sachs Non-energy Total Return Index (GSNE). It has a minimum investment of €20,000.

Canada Lifes Quadrivium Fund invests in four different asset classes – equities, bonds, property and commodities. Investors can access this if investing a lump sum of €50,000 or more into the Canada Life Investment Portfolio.

Rabodirect also offers a number of commodity-linked funds, including the BlackRock World Mining Fund, which invests primarily in the equity securities of mining and metals companies worldwide; the BlackRock World Gold Fund, which invests in companies worldwide whose predominant economic activity is gold mining; and the JPM Global Natural Resources Fund, which invests in global natural resources companies.