Commodities outlook: what to check before buying funds and ETFs

Commodities tend to behave differently from conventional asset classes (shares and bonds), which means they can be very useful for the purposes of diversification and as an inflation hedge.

For some investors, the desire for diversification may have added importance as commodities offer a differentiated way to access the energy transition and AI-related themes other than holding additional tech shares.

Clive Burstow, senior thematic equity portfolio manager, HSBC Asset Management, notes: “Commodities and related equities can bring diversification benefits to portfolios at a time when many equity markets are increasingly driven by similar themes such as AI and data centres.”

For other investors, commodity exposure is used for diversification instead of bond exposure.