22 Comments
User's avatar
Tim's avatar

Commodities and Bitcoin for 10 years. The more I study the state of the world I don't understand how anyone could neglect these opportunities. 😀

Steve's avatar

Thanks for that. May I ask given that oil is in a glut do you include it, ie you expect the price to go up?

Are you able to recommend any investments? Is SPDR. S&P GLOBAL NATURAL RESOURCES ETF, on your buy list?

Will you be recommending anything in the near future?

Thanks

S

Dominic Frisby's avatar

Thanks Steve.

Yes, I include oil, and I think one should maintain exposure to it as you never quite know when it's going to move such as earlier this year. SPOG.L is the vehicle I use.

The SPDR S&P Global Natural Resources ETF (GNR) is certainly one way to play the broader thesis and I like the chart a lot, as you can probably tell from the article. I don’t currently own it, though. I tend to prefer picking individual companies where I think there is more upside.

And yes, there will definitely be more specific recommendations. I’m pretty much fully invested in my mining portfolio now, and I’ll be writing about where that money has gone over the coming weeks.

Dominic

Steve's avatar

Just an update on an earlier comment re Uranium. I bought yellow cake and another Canadian miner, both up considerably in just 10 days. The first 6% the other 11%.

I think your update on commodities would be most welcome.S

Pete Miller's avatar

Couldn’t argue with any of that, Dominic!

At the Races's avatar

Dominic, I like your analysis around SPDR S&P Global Natural Resources ETF and the commodity cycle; indeed my discredtionary manager has just bought me some L&G Multi-Strategy Enhanced Commodities UCITS ETF.

The advantage of the L&G is its London listing, but I am not so keen on their use of swap contracts, etc.

There seem to be a number of other alternatives. Would you favour any other with a LSE GBP listing please??

Thanks for your brilliant commentaries - rated 9/10 by me in your survey!!

Dominic Frisby's avatar

Thanks, and thanks for the 9/10!

Yes, the London listing is certainly more convenient. My slight reservation with the L&G fund is the same as yours: it gives you commodity exposure synthetically through swaps rather than owning natural-resource companies.

I was using GNR in the piece as a proxy for global natural-resource equities, rather than making a specific recommendation to buy that ETF. I generally prefer owning the companies themselves, and increasingly individual companies where I think I can find something mispriced.

There are some LSE-listed alternatives, though, and I’ll have a proper look at them. It might actually make a useful follow-up piece: the best ways for UK investors to get broad commodity/resource exposure without having to pick individual stocks.

Dominic

At the Races's avatar

Thanks vm for your quick reply

- broad commodity/resource exposure without having to pick individual stocks.

Just what I am looking for!

ATB, Miles

Jon's avatar

kind of like inverting the question - are people going to have to pay for hard assets with the, then, hard cash...

Dominic Frisby's avatar

Yes, exactly. That’s another way of looking at it. Are hard assets really getting more expensive, or are we simply having to pay for them with increasingly soft money? In gold terms, many commodities have actually got cheaper over the long run.

Harambe's avatar

All very well but GNR is not available on (useless compared to their US equivalents!) U.K. investment platforms such as HL, ii & A.J Bell.

Dominic Frisby's avatar

Yes, fair point. I used GNR primarily because it gives us such a useful chart of global natural-resource equities rather than as a specific recommendation. I should probably do a follow-up looking at the best equivalents actually available to UK investors.

Gavin Burgess's avatar

Thanks for the article Dominic. Been thinking for a while about buying a broad based underlying commodity ETF/ETC that tracks either the CRB or BCOM indices. Just wondering if you had any thoughts on suitable contenders to consider that are UK compliant?

Dominic Frisby's avatar

Yes, I’ve been looking at this too. The problem is that the choice for UK investors is considerably less straightforward than it is in the US. There are a few broad commodity ETFs/ETCs available here, but they differ quite significantly in index, structure and use of swaps. I think this probably deserves a separate piece comparing the UK-compliant options rather than me chucking out tickers in the comments. As a rule I tend to go for individual companies, as you have probably seen

Bruce Goodwin's avatar

👍🏻 Capital Cycle theory on steroids. It does seem particularly apt to commodity/resource markets.

The Pareto Investor's avatar

This commodity supercycle is still in its early-to-middle innings.

Silver Sovereign's avatar

Is SPOG oil and gas a way to play this? It was highlighted earlier in the year but - obviously - in articles on oil and gas. Is SPDR S&P Global Natural Resources ETF a better bet or it merely personal choice in that one is a bit more of a focused play and one broader?

Dominic Frisby's avatar

Spog is more focused. I own it in my portfolio. I don’t own the Natural resource resources Etf.

Silver Sovereign's avatar

Thank you.