What are commodity funds?

It may sound a little obvious, but commodity funds are funds that invest in commodities, such as precious metals like gold and silver; energy resources like oil and natural gas; and agricultural goods such as wheat. They may also invest in the companies that mine these commodities.

Benefits of commodity funds

Because of their unique makeup, commodity funds come with several benefits for investors, including:

  • Portfolio diversification. Historically, commodity funds have had low correlation with equity market movements, which makes them a valuable source of diversification in your portfolio.
  • Protection against inflation. Commodity prices tend to rise as inflation rises, offering a natural form of protection against downside risk.
  • Investor upside potential. Commodity prices rise and fall in tandem with supply and demand. The more a commodity is in demand, the higher its price — and profit for the investor — will rise.

Why choose BlackRock for commodity fund investing?

BlackRock is the largest and most trusted asset manager in the world, with more than $5 trillion in total assets under management. Our commodity funds benefit from over 20 years’ of insight and experience. Moreover, BlackRock commodity funds are diverse and priced to meet investor portfolio needs.

Types of commodity funds?

There are many different types of commodity funds, including the following:

  • Index funds. These funds track an index that includes various commodity assets.
  • Commodity funds. Known as "true" commodity funds, they invest directly in the underlying commodity asset. An example would be a commodity fund that holds a direct position in gold and oil.
  • Futures-based commodity funds. These funds offer exposure to commodities through investing in futures contracts without ever buying the actual commodity assets themselves. This type of investment can carry higher risk due to the volatile nature of the futures contracts market.

How do BlackRock's commodity funds compare to others?

  • BlackRock offers a strong selection of commodity funds and active commodity investment strategies.
  • Our commodity funds are accessibly priced and allow you to choose from a range of strategies.

What are some risks associated with investing in commodity funds?

A commodity fund investment has historically provided investors with opportunity for diversification, downside protection and upside potential. However, as with all types of investment, commodity fund investing carries risk. You are advised to carry out due diligence to ensure that commodity fund investing is the right decision for your portfolio.

Commodity markets can be volatile, which can expose investors to the possibility of considerable price fluctuation. Commodities themselves and commodity companies can present risk related to political, economic, foreign currency and exploration variables.

What are some myths associated with investing in commodity funds?

Myth #1: Commodity trading is too risky to be worthwhile
Truth: Commodity trading can carry risk, but often investors who make a loss simply do not prepare appropriately. That's where BlackRock comes in. Our commodity funds are scoped to the smallest detail and professionally managed by experts for strong investor returns.

 



Myth #2: There is no way to know the quality level of the commodity
Truth: Exchange-traded commodities must meet a strict standard for quality. Commodities are subject to stringent inspection and audit procedures by exchanges.

 



Myth #3: Commodity markets are very volatile
Truth: Like equity markets, commodity markets can be volatile. Commodities, however, benefit from an increase in price along with a rise in inflation, mitigating some risk. They can also provide investors with an excellent source for upside potential and portfolio diversification.

See standardized performance here.

Performance data quoted represents past performance and is no guarantee of future results. Investment returns and principal values may fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than that shown. All returns assume reinvestment of all dividend and capital gain distributions. Refer to blackrock.com for current month-end performance.