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Feature: The undiscovered asset class?
02 April 2010
Commodities are one of the least understood investment opportunities but are growing in popularity. Global Investor/isf examines the reasons behind the surge in popularity.
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[Vanguard Citi Pioneer BlackRock commodities]
Karl Marx once said: “A commodity appears at first sight an extremely obvious, trivial thing. But its analysis brings out that it is a very strange thing, abounding metaphysical subtleties and theological niceties.”The German philosopher, credited with being one of the founders of modern day communism, certainly didn’t invest in the commodities markets given his strong opinions on capitalism but his view that they are deceptively complicated still abounds in the investment world today.A recent white paper released by Vanguard titled: Investment case for commodities? Myths and reality, describes them as “one of the least understood asset classes.” And the paper was correct.Part of the confusion surrounding the market is that many transactions in the commodities arena do not mean that the investor actually takes delivery of a tangible commodity like a barrel of oil. Instead, investors often deal in futures where a long investor enters an agreement to buy...
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