In the breakdown of assets underlying Media Super’s investment options, Commodities investments are detailed as 'Commodities'. Commodities may be domiciled in Australia or internationally. For details about the sector allocations of Media Super's investment options that include Commodities, refer to the individual Options.
what are Commodities investments?
Commodities are primary products most frequently used as inputs in the production or manufacture of other goods or services or as an ingredient of food. Hard commodities are typically natural resources that must be mined or extracted (e.g. copper, gold, rubber, oil, etc), while soft commodities are agricultural products or livestock (e.g. wheat, sugar, soybeans, cattle, etc.). When they are traded on an exchange, the minimum quality of commodities must comply with specified international standards.
Commodities market investments may include futures contracts, exchange traded funds, stocks in commodities-related companies and physical assets.
what are the risks of investing in Commodities?
Derivative risk is a factor when investing in Commodities, as is market risk (i.e. the risk that the Commodities market falls in value). Because of this, over short-term periods in particular, there is a risk that the return on the portfolio may not exceed inflation (inflation risk) and the returns on this portfolio could be negative.