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Commodities anyone?

Closed-end funds and OEICs
Peter1B1
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Commodities anyone?

#453668

Postby Peter1B1 » October 27th, 2021, 5:45 pm

I had a run with a commodities IT many years ago and sold out after disappointing performance over several years, at around par. I told myself not to get into commodities again: because they were cyclical and timing mattered, which I was likely to get wrong.

Now, with some experience and established and purposeful pfs under my sway (income ISAs, SIPPs in growth phase, and now building high growth :lol: ISAs), I am wondering whether there is a necessary role for commodities - as part of IT diversification and long term growth and even income.

This thinking is driven more particularly by the long-term decarbonising of global economies, something that wasn't a factor in my earlier foray. The drive toward battery metals, non-fossil energy, semiconductor elements, the massive growth of computing power, rebuilding of the grid makes me think the this time around, cyclicality is not just what it is about. I would also gain some exposure to gold and yield is always welcome.

Yes, performance may be lumpy with long lead times to explore, mine, extract and refine. But the long-term driver to undertake such risks is clear and the appetite for appropriate commodities will only grow. Whilst the early days may be gone, there are decades further to come and some participation makes sense to me.

I am looking for a commodity IT focussed on current markets but with a strong eye to future demand, and where it will come from. Geiger Counter is a current top performer but largely in Uranium. Other positive growth candidates (albeit from a limited field), include BlackRock Energy and Resources, BlackRock World Mining (which seems in the right ballpark). CQS Natural Resources looks interesting with a lot of unlisted alongside corporate agility, but less impressive 5yr growth.

I would welcome comment from Fools, please.

Peter1B1

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Re: Commodities anyone?

#453776

Postby 77ss » October 28th, 2021, 8:42 am

Peter1B1 wrote:I had a run with a commodities IT many years ago and sold out after disappointing performance over several years, at around par. I told myself not to get into commodities again: because they were cyclical and timing mattered, which I was likely to get wrong.

Now, with some experience and established and purposeful pfs under my sway (income ISAs, SIPPs in growth phase, and now building high growth :lol: ISAs), I am wondering whether there is a necessary role for commodities - as part of IT diversification and long term growth and even income.

This thinking is driven more particularly by the long-term decarbonising of global economies, something that wasn't a factor in my earlier foray. The drive toward battery metals, non-fossil energy, semiconductor elements, the massive growth of computing power, rebuilding of the grid makes me think the this time around, cyclicality is not just what it is about. I would also gain some exposure to gold and yield is always welcome.

Yes, performance may be lumpy with long lead times to explore, mine, extract and refine. But the long-term driver to undertake such risks is clear and the appetite for appropriate commodities will only grow. Whilst the early days may be gone, there are decades further to come and some participation makes sense to me.

I am looking for a commodity IT focussed on current markets but with a strong eye to future demand, and where it will come from. Geiger Counter is a current top performer but largely in Uranium. Other positive growth candidates (albeit from a limited field), include BlackRock Energy and Resources, BlackRock World Mining (which seems in the right ballpark). CQS Natural Resources looks interesting with a lot of unlisted alongside corporate agility, but less impressive 5yr growth.

I would welcome comment from Fools, please.

Peter1B1


FWIW, I have recently added BRWM to my holdings. Adding to my mining exposure.

I have held RIO for a long time and over the decades it has certainly delivered. As you say, cyclical, lumpy etc but patience is rewarded - as is buying/selling on lows/highs. No doubt others could say the same of different mining majors.

I hope for a smoother ride with BRWM. Accepting a lower lower long term TR as the price of less volatility.

richfool
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Re: Commodities anyone?

#453792

Postby richfool » October 28th, 2021, 9:52 am

Peter1B1 wrote:I had a run with a commodities IT many years ago and sold out after disappointing performance over several years, at around par. I told myself not to get into commodities again: because they were cyclical and timing mattered, which I was likely to get wrong.

Now, with some experience and established and purposeful pfs under my sway (income ISAs, SIPPs in growth phase, and now building high growth :lol: ISAs), I am wondering whether there is a necessary role for commodities - as part of IT diversification and long term growth and even income.

This thinking is driven more particularly by the long-term decarbonising of global economies, something that wasn't a factor in my earlier foray. The drive toward battery metals, non-fossil energy, semiconductor elements, the massive growth of computing power, rebuilding of the grid makes me think the this time around, cyclicality is not just what it is about. I would also gain some exposure to gold and yield is always welcome.

Yes, performance may be lumpy with long lead times to explore, mine, extract and refine. But the long-term driver to undertake such risks is clear and the appetite for appropriate commodities will only grow. Whilst the early days may be gone, there are decades further to come and some participation makes sense to me.

I am looking for a commodity IT focussed on current markets but with a strong eye to future demand, and where it will come from. Geiger Counter is a current top performer but largely in Uranium. Other positive growth candidates (albeit from a limited field), include BlackRock Energy and Resources, BlackRock World Mining (which seems in the right ballpark). CQS Natural Resources looks interesting with a lot of unlisted alongside corporate agility, but less impressive 5yr growth.

I would welcome comment from Fools, please.


FWIW, I hold: BERI, CYN and BRWM, in that order of size and performance.

BRWM was my more recent purchase and I am down some 13% on that. BERI, I have held longest and is up some 40%.
CYN I am up c 18%.

I feel least comfortable with BRWM because of its direct exposure to just miners, whereas BERI (more diversified) holds energy (traditional and renewable), commodities and miners. CYN is somewhat more specialist as it holds small miners and mining fixed interest securities, and its holdings include lithium, copper, gold, oil and gas etc.. BERI provides me with the highest dividend yield on cost, as I bought it when it was yielding c 6.0%.

I see them as cyclical and volatile, particularly BRWM and CYN and ponder if I may sell BRWM at some future date.

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Re: Commodities anyone?

#453812

Postby 88V8 » October 28th, 2021, 10:42 am

I hold BERI which as richfool said has some renewables, and a nice yield which is why I hold them.

If one wants to go more directly into renewables and if one regards hydrogen as a commodity, there's HGEN, a new kid on the block.

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Re: Commodities anyone?

#453826

Postby stevensfo » October 28th, 2021, 11:24 am

I did a lot of reading about portfolios after the Financial Crisis and decided to include 10% commodities. Like richfool, I also hold BERI, CYN and BRWM, though bought yonks ago for the rather high dividends and not capital growth. I'm aware of the overlap, but happy with it. As I'm still in the accumulation stage (for another 1-2 years), I add the dividends to a pool used for topping up other holdings, including many bought for growth. Not topping up commodities now, but would if they were to fall a lot. For me, it's a long-term view.


Steve

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Re: Commodities anyone?

#453836

Postby Wuffle » October 28th, 2021, 11:50 am

hi,
Just BERI for the widest spread of contents in a streamlined pf.
And I get the urge to mess with stuff out of my system with a couple of tiny commodity punts to bulk that up a couple of percent.
They swing about more with the natural leverage for a nice 'rush' and it means I leave the ITs alone to get on with it.

W.

Peter1B1
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Re: Commodities anyone?

#453846

Postby Peter1B1 » October 28th, 2021, 12:28 pm

Many thanks, all. Focus seems to be towards BERI and CYN - I'll have a closer look at BERI as CYN is probably on the buy list for its 'in the game' attitude. LTBH, probably in the SIPPs where volatility can be tolerated and the diversification will help.

The SIPPs are in danger of breaching the Lifetime Allowance - albeit forecasting twenty years ahead but the tax effect is so harsh that it is worth taking avoiding action, even now. So a degree of stabilisation through wider diversification and, in time, gradually moving towards lower risk/higher yield ITs. Even, perhaps, some bonds in due course - though I never thought I'd say that!

Appreciated. Peter1B1

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Re: Commodities anyone?

#548240

Postby 88V8 » November 20th, 2022, 5:57 pm

Thirteen months on, what we need is some lithium miners.... an article about a Canadian startup which contains some interesting nuggets.. "the greatest disconnect between supply and demand in the history of commodities"... there's not going to be enough lithium. By 2030, if all existing mines keep producing and everything that's under construction comes to fruition, there'll still be barely enough metal to satisfy half of demand. This will be a lithium resource squeeze of epic proportions...... the battery guys are saying OK, we'll build another factory for you. They're building 13 or 14 gigafactories now, just in North America. And there's no raw material to meet that.

The comments at the foot of the article are also, ahhh, interesting as regards the environmental effect of lithium mining.

I think I shall leave it to the better informed to pick individual miners, and take refuge in BRWM, or BERI which I sold out of when the yield fell.

And I have no plans to buy an electric car, but it will be fun to watch all the govt backpedalling - those same govts that let China get the drop on us as regards lithium - when we near 2030 and it eventually becomes apparent that there's no way we can ban new ICE cars.

Oh, the article, here it is.

V8


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