![]() Commodities have developed into a separate asset class for investors looking to diversify from traditional asset classes such as equities and bonds. In this article we will focus on commodities as an investment option. We will look at the advantages and disadvantages of investing in commodities and also look at the different options to invest in commodities. Ways to Gain Exposure to the Commodity Markets Direct Investments Direct Investments in commodities refers to buying the physical asset. However, this is very impractical considering the storage, transportation and insurance costs involved in buying physical commodities. Direct investments in commodities is practiced very rarely exception being some developing countries like India where people buy gold and silver. Commodities Derivatives One of the easiest ways that investors use to gain exposure to commodities is through commodities derivatives. Commodities derivatives include over the counter swaps and commodity futures, which are mainly traded through organized exchanges. Commodities futures are particularly used to gain exposure to commodities asset class. Commodities futures contract is a bilateral agreement where one party obligates to buy and another party to sell a commodity through an organized exchange at a set price and on a specified date. However, delivery of commodity is not required to close a futures contract as an investor can close the contract by taking the opposite position to the one he had previously taken. Index Products Another option to gain exposure to commodities is through Index products targeting commodities indices such as Exchange Traded Funds (ETFs). By investing in Index based products, an investor can gain exposure to a number of commodities and does not have to actively manage each contract individually unlike a Futures Contract. Pooled Commodity Funds A commodity fund is a collection of investors, who pool their funds to invest in the commodities futures market. They are a subset of the hedge fund market. Commodity funds are managed by a general partner who must be registered with the Commodity Futures Trading Commission (CFTC) and National Futures Association (NFA). Equities related to Commodities. One way of gaining exposure to commodities is through investing in equities of listed companies that derive majority of their revenues from buying and selling physical commodities. The profits of such firms depend on the prices of commodities. Commodity-Linked Note In a Commodity-Linked Note an investor can combine a standard interest paying debt instrument with either a commodities futures contract or an option on commodity prices. The bond investor accepts lower coupon payments in exchange for receiving the upside potential from commodities. Commodities-Linked Notes have credit risk. Advantages of investing in Commodities
Johnson Wayne
7/31/2014 12:09:18 am
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Joeduane
8/15/2014 02:43:57 pm
We offer fresh cut bank instrument for lease/sale, such as BG, SBLC, MTN, Bank Bonds, Bank Draft, T strips and other. Leased Instruments can be obtained at minimal expense to the borrower compared to other banking options and we also discount/monetize BG's.
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2/22/2015 11:22:41 pm
We are direct providers of Fresh Cut BG, SBLC and MTN which are specifically for lease, our bank instrument can be engage in PPP Trading, Discounting, signature project( s) such as Aviation, Agriculture, Petroleum, Telecommunication, construction of Dams, Bridges, Real Estate and all kind of projects. We do not have any broker chain in our offer or get involved in chauffer driven offers.
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Martin Steffen
4/5/2018 10:50:37 am
Dear Sir/Ma
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jeffrey alan
5/5/2018 03:49:07 pm
We are direct providers of Fresh Cut BG, SBLC and MTN which are specifically for lease, our bank instrument can be engage in PPP Trading, Discounting, signature project (s) such as Aviation, Agriculture, Petroleum, Telecommunication, construction of Dams, Bridges, Real Estate and all kind of projects. We do not have any broker chain in our offer or get involved in chauffer driven offers.
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Kevin O'Neill
7/6/2018 04:04:53 am
Finding a genuine provider of financial instrument is very challenging but we are a certified Financial Instrument provider in Ireland. Presently, we only focus on BG/SBLC for Lease and Sale transactions. However, our Lease BG/SBLC is 4+2% and Sale at 32+2%.
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James Petty
8/31/2018 03:10:00 am
Dear Sir,
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ivan john
9/3/2020 05:54:49 pm
We offer certified and verifiable bank instruments via Swift Transmission from a genuine provider capable
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we are authorized Financial consulting firm that work directly with A rated banks eg Lloyds Bank,Barclays Bank,HSBC bank etc
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