Commodities 'Best Performing Asset Class For Investors'

Commodities have provided strong returns for investors over recent years, new research has shown.

Figures from the Association of Investment Companies (AIC) show that longer-term investors have also seen higher returns those who have been playing the markets for just a year. A £1,000 investment was found to have, on average, lost seven per cent over the past 12 months, but to have grown by over 50 per cent over three years.

Moreover, this single investment would also have grown to £5,337 if put into the average investment firm eight years ago, AIC said.

Among asset classes, record oil prices ensured that commodities and natural resources was the best performing sector over the past year, rising 31 per cent across the period. Emerging markets have also done well, increasing in value by 24 per cent on the whole. Over three and five years, the best performing sectors among investment companies were the Asia Pacific category, which improved by 135 per cent and 447 per cent, and Emerging Markets, which went up by 150 per cent and 326 per cent.

The impact of the credit crunch has ensured that financial stocks have been badly hit, however, with multi-billion asset write-offs from banks knocking investors' confidence. The financials sector was down 25 per cent over the past year, although AIC also found that the shares were up 105 per cent over the past theee years overall.

AIC's Annabel Brodie-Smith said: "It's no surprise that the Commodities and Natural resources sector is out in the lead over one year with oil prices at a record high and commodity prices rising. "

She added: "It's interesting to look at the top performing sectors but these figures clearly illustrate the importance of taking a long-term view and having a balanced portfolio with exposure to a variety of different sectors and countries."
 

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