Hard and Soft Commodities Rewarding Brave Investors

Metals are being supported by industrial demand and soft commodities such as coffee and lumber are being driven by global trends such as population growth

Holly Black 29 August, 2017 | 8:55AM
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Timber worker in China

The FTSE All Share Basic Materials sector has been one of the poorest performers of recent years. Over the past decade it has produced an annualised return of just 1.6% and a total return of just 16.9%. But some experts are starting to feel more optimistic about the sector, which includes metals and soft commodities such as timber and coffee.

A glut of commodity supply, a fall in demand in China and the advent of fracking, along with a prolonged global financial crisis, have given companies in the sector an incredibly difficult time over the past few years. According to Morningstar data, a £10,000 investment a decade ago would be worth just £11,689 today, and investors would have had to endure a rollercoaster ride over that period as the index slumped 30% only to soar 31% the next.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
BlackRock World Mining Trust Ord574.55 GBX-0.94

About Author

Holly Black  is Senior Editor, Morningstar.co.uk