What is the Best Way to Invest in Commodities?
Investments in commodities provide investors with certain risks and benefits. For instance, commodities are supposed to be linked to business cycles and therefore should provide investors with a positive return during economic expansion.
Investors who wish to gain exposures to commodities have a number of choices of investment products:
- Direct investment in commodities. This requires the investor to buy and store the commodities, which makes this strategy less attractive to institutional investors such as pension funds typicaly.
- Indirect investment through futures and swap contracts. This approach is perhaps the most popular and least costly approach. The availability of various commodity indices makes this strategy attractive to institutional investors.
- Indirect investment through equities of publicly traded firms that focus on commodities. Most investors already have such allocations to commodities through passive or active equity strategies.
- Indirect investment through private equity of firms that focus on commodities. Next, to direct Investment in commodities, this approach is the least accessible strategy.
Alternative Investments
Alternative investments offered by Alvear can play a powerful role in helping you achieve your goals. At Alvear Capital, we look for the broadest range of opportunities to help our partners achieve their investment goals. That’s why we believe private equity, hedge funds, and other alternative investments should be considered a fundamental part of nearly every investor’s portfolio.
Scope of Services
Alvear Capital will establish a team responsible assess the optimal set-up to gain exposure to the commodities sector. This will consider a number of criteria’s and parameter’s to make any recommendations in this area. Our main area of expertise lies in the field of direct investments. We could support the development of a physical trading desk in mostly any commodities trading.
