Commodity Investment - Which Security?

[schenbew]

Looking for thoughts on how to invest in commodities.

I'm becoming increasingly convinced that the developed world has under invested in commodity production production capacity (metals, oil, gasoline, diesel, jet fuel, natural gas, etc.). Coupled with the fact that international trade has recently become, shall we say, problematic (Ukraine war, Chinese lockdowns, etc.), there is now a world wide scramble for commodities likely to stay in place for years since the solutions to solving these supply shortages are expensive and take lots of time to resolve - bringing on line new refining/mining/manufacturing capacity.

I would like to invest a small % of our portfolio in a commodity security focusing on near term prices, not long term futures contracts and not commodity producer stocks. Ideally the security would track the Bloomberg Commodity Index (BCOM), which focuses on short term commodity prices.

I found the BCOM.L ETF and the DJP ETN. Reading the prospectuses there are clearly lots of risks in these securities, so again, I'm only going to invest a small % of assets into commodities.

Any opinions on these 2 securities? Any ideas on other options or where to search for additional info?

Always appreciate the collective wisdom of the ER crowd - looking forward to learning more.

 

[Phroig]

Some ideas are DBC, BCI, FFGCX. The easy money may have already been made, especially if we get into a recession.

 

[38Chevy454]

Picking sectors is basically a form of market timing. Yes, if you can pick a sector that is going to increase demand, you can do better than the overall market. Just remember the overall market is made up of different sectors. So in the aggregate, for a sector to be up, some different sector has to be down to give overall market performance.

Now as far as current hot sectors, I agree with Phroig that some of the easy money is already priced in. I will say that with the push for more EVs and energy storage that you might look into that field (mining, metals). It still has some room to grow IMHO, but the increases will be less than in past. I think energy has run its course so you missed the opportunities there. Inflation and interest rate increase are going to slow demand for products and housing starts. So again those sectors feeding into products and housing may be past.

 

[aja8888]

Some ideas are DBC, BCI, FFGCX. The easy money may have already been made, especially if we get into a recession.

This ^^^^^^^, and we are headed that way. Copper prices have fallen off a cliff and oil/gas is already way up. The time to invest in commodities, which is a risky play anytime, was a year ago.