Buying into commodities

Retail investors are showing greater interest in commodity-linked products. But despite a wide variety of commodity indexes available, most of the structures launched in Europe so far have been based on small, tailor-made baskets. By Patrick Fletcher

Cash invested in commodity indexes has reached around $50 billion, a rise of about 900% over the past five years. The Dow Jones AIG Commodity Index alone had grown to $9 billion as of the end of March – that’s a whopping 1,700% increase since 2003. Most of that cash has come from institutional investors looking to diversify away from equity and bonds amid sluggish returns in those markets over the past few years.

More recently, retail investors have taken a strong interest in the commodity