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Get pork on your portfolio's fork

Christine St Anne  |  02 Dec 2011Text size  Decrease  Increase  |  

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Christine St Anne is Morningstar's online funds and ETFs editor.


Fancy a bit of live cattle and lean hogs in your portfolio? Perhaps some corn, wheat, soybeans and sugar?

BetaShares has launched a number of exchange-traded funds (ETFs) that give investors access to a range of commodities and agricultural products, including live cattle, lean hogs and soybeans.

The firm already launched the country's first crude oil ETF last week.

The products have not yet been rated by Morningstar, but they do highlight growing investor interest in the commodities and agricultural sector.

According to BetaShares head of product strategy and distribution, Drew Corbett, planners are increasingly looking to boost their exposure to commodities.

"Over the last 10 months, we have spoken to many clients and planners who have expressed demand for an index that gives them exposure to agriculture and broad commodities," Corbett says.

"They knew these products were listed overseas and wanted to know when they would be available in Australia. We have responded to this demand."

In particular, Corbett says investors have become increasingly alert to media reports about food shortages and the increasing cost of food.

With food shortages set to continue around the world, the demand for agricultural and soft commodities seems assured.

Morningstar head of industries research Peter Rae says prices for commodities and agricultural products will remain strong in the medium to long term.

"Demand for food from Asia will continue in the medium to long term as the middle class increases. The demand for food will feed into the demand for Australian agricultural assets," Rae says.

For Credit Suisse managing director Alex Toone, commodities have emerged as a key global risk.

"When I started in commodities back in the mid-1990s, no one cared about commodities. But now it has become a mainstream issue and guaranteed front-page material. Commodities have moved from a tail risk to a key risk," Toone says.

The risks stem from geopolitical issues in a number of resource-rich countries that will feed into higher prices.

The key driver behind high commodity demand will come from the growing industrialisation of emerging countries, including China.