Alternatives for commodity investors
For those wanting diversified exposure to commodities, there are two other options. Firstly, ETFs (exchange traded funds) that track commodity indexes are a great way for investors to own a basket of commodities.
The Invesco DB Commodity Index Tracking Fund (DBC) tracks an index of 14 different commodities. Nearly 50% is invested in energy commodities while 25% is invested in agricultural commodities. Industrial and precious metals make up the remainder. This is a good option for long term investors but has relatively low exposure to gold.
Another option is the iShares S&P GSCI Commodity Indexed Trust (GSG). This fund is similar but has higher exposure to energy and very low exposure to precious metals.
The other alternative is to buy into diversified mining companies. These companies are very large and are diversified across several commodities and regions. BHP (BHP) and Rio Tinto (RIO) are the two largest mining companies in the world and the best commodity stocks to invest in. Both earn most of their revenue from iron ore, followed by copper and aluminium. BHP also has exposure to oil and coal. These companies are one of the best ways to invest in global industrial growth and especially in China’s growth.
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