The Best ETFs Australia commodities sector includes funds and ETFs which invest in:
Typically, "Synthetic ETFs" are commodity ETFs that provide investors with exposure to an asset class (e.g. gold prices) but they do not own the underlying asset (gold bars). They do this with derivative contracts.
"Physically-backed" ETFs have arrangements in place (including storage, safe storage and insurance) to physically own the underlying asset (e.g. gold bars). You will find information on where and who holds the gold, as well as some key risks associated with the arrangement, in the ETF's product disclosure statement (PDS).
It depends on the ETF, asset class and arrangements in place. Typically, physically-backed ETFs are considered safer because they have a claim on the underlying assets.
When you invest in commodities (like gold, silver or oil), some academic studies show you may be lowering some of the risks in a diversified portfolio. For example, you won’t have all of your eggs in your ‘Australia basket’.
However, our emphasis is on the some. Investors considering investing a meaningful amount of money in commodities should strongly consider getting expert financial advice before making an investment decision.
Factually speaking, some of these risks to commodities include:
This brilliant (and free!) report is issued by Best ETFs Australia, a division of The Rask Group Pty Ltd. It is not a recommendation.
Speak to a financial professional before relying on this information and please read our Financial Services Guide (FSG).
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