Rated funds: Top four commodity investments

It is difficult to imagine that anyone is unaware of the importance of commodities in our everyday lives.

Rising energy prices have cranked up household costs and higher food prices are squeezing family budgets.

World population growth and rising living standards in emerging markets mean prices are likely to increase over the long term. That said, it is possible to benefit from these trends by investing in companies in the commodities sector.

Click each fund chart on the right-hand side for an expanded version. To find out more about the methodology, read: How Money Observer's Rated Funds were chosen.

Baring Global Agriculture

Money Observer has rated this fund as an Editor's Choice because they believe it gives investors exposure to an area of increasing importance and because Barings has a convincing record in resources generally. The fund, managed by Jonathan Blake, can invest in any company where most earnings derive from agriculture and soft commodities.

It could be fertiliser and machinery companies, firms involved in grain handling and logistics, and food manufacturers and retailers. Blake says this flexibility means he need not rely on rising commodity prices to add value and he can perform well in a range of market conditions.

First State Global Resources

This fund was one of Money Observer's growth tips for 2013. First State's global resources team was established 15 years ago. Key members of the team, including head of global resources Joanne Warner, are based in Australia, which is a considerable benefit given the demand for commodities emanating from Asia.

The team also includes mining and petroleum engineers, as well as experts in agriculture, physics and chemistry. Their knowledge helps them understand the risks and opportunities associated with resources projects.

Artemis Global Energy

An Editor's Choice, this fund is relatively new. It launched two years ago, and is managed by John Dodd and Richard Hulf. Money Observer likes this combination. Dodd has a strong investment record and Hulf worked in the oil industry and carried out oil and gas research before joining Artemis.

They follow the company's "high conviction" approach, which means the fund's portfolio holds a relatively small number of stocks, around 40, that the managers believe will outperform their peers. Despite this concentration, they are keen on diversification. They invest mainly in medium-sized companies.

BlackRock World Mining Investment Trust

This trust is an Editor's Choice. Money Observer likes it because it has been around for 20 years, has a strong track record and possesses a talented investment team in Evy Hambro and Catherine Raw. Another plus is that the trust has started placing a greater emphasis on yield. It invests mainly in the shares of larger mining and metal companies.

Its portfolio is well-diversified, both geographically and in terms of the commodities it is exposed to. The managers focus on companies with strong balance sheets and high asset quality.

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Fund Data
Name1 Year (%)3 Years (%)5 Years (%)Rating
Artemis Global Energy5.88-4.93-1 star(s)
Baring Gbl Agriculture1.004.4149.125 star(s)
BlackRock World Mining IT13.14-32.4135.13N/A star(s)
First State Gbl Resrcs15.73-32.1721.261 star(s)

Searching for funds for your ISA? Investments from the UK equity, emerging market, property, commodities and many other sectors are regularly updated in the Money Observer Rated Funds.