Commodities are a distinct asset class with returns that are largely independent of stock and bond returns. Adding broad commodity exposure can help diversify a portfolio of stocks and bonds, potentially lowering the risk of an overall portfolio and boosting returns. Given their impact on consumer goods prices, commodities can also offer a hedge against inflation. Commodities include agricultural products (such as wheat and cattle), energy products (such as oil and natural gas), and metals (such as gold, silver and aluminum). There are also commodities that cannot be stored for long period of time (which includes; sugar, cotton, cocoa and coffee).
The commodity market has evolved significantly and today investors can choose from a variety of opportunities to invest in the commodities future markets, from mutual funds to notes, covering the wide spectrum from single commodity exposure to sector and broad based commodity exposures. Because commodities are real assets, they tend to react to changing economic fundamentals in different ways than stocks and bonds which are financial assets. In this case, commodities are one of the few assets classes that tends to benefit from rising inflation. As demand for goods and services increases, the price of those goods and services usually rises, as well as the commodities used in producing those goods and services. When commodity prices rise during inflation acceleration, investing in commodities may provide portfolios with a balance against inflation. In other words, stocks and bonds tend to perform better when the rate of inflation slows down. Commodities like iron ore, fossil fuels, precious metals and livestock are raw materials that powers the global economy and offer unique opportunities for investors to invest and profit from. Commodity trading can generate strong returns and add diversification in our investors portfolios. Investing in commodities requires more specialized knowledge and may carry more risk than more well-known investments but as an organization who looks out for the general interest and wellbeing of our clients, we have employed good skilled personnels to help limit such risk, through diversification means when trading in the market.
Here in Providus Capital Ltd, we make use of an automated system thereby limiting the stress on every active investors, investing with us in the global market because in most basic sense, commodities are known to be risky investment propositions, due to the fact that they can be affected by uncertainties that are difficult, if not impossible to predict.