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Last week was another week of records for the commodities markets. Gold reached a fresh 25 year peak on Friday, while Copper touched an all time high

ARE YOU THE TYPE TO GET CAUGHT IN THE HYPE?

The jury remains out as regards the sustainability of the commodities boom, but latest analysis from online fund ratings provider moneyspider.com reveals that of the seven commodity-based funds available in the UK market, with total assets of some £2.3bn invested, just two have a track record of more than three years, (see table below).

Over the last three years alone, five funds have been launched by known and lesser-known fund management groups, keen to cash in on the commodity-fuelled boom. The numbers are of course tantalising, with gold prices up 127 per cent since their lows in 2001, copper up 300 per cent and oil from $25 USD a barrel in 2001 to more than $72 today, an increase of 188 per cent . But Bill Ross, Managing Director of moneyspider.com remains circumspect. “We are experiencing a bull run not witnessed since the 1970s, but investors need to heed a degree of caution.”

Ross is quick to point out that unlike the tech boom, which was built on valuations of future cash flow projections, the commodities extravaganza does have more substance to it, in the supply and demand story - in particular from China and India’s burgeoning 2.4 billion populations.

“Commodities have become the latest and greatest investment fad”, says Ross. “But unlike the technology boom of the early 2000s, the commodities boom is built on increased demand from emerging economies such as China, India and Eastern Europe. At the same time supply has been restricted due to environmental concerns or from high risk political areas such as Latin America and Russia. As the living standards of the Chinese and Indians increase, so too does their demand for raw materials, metals and energy. To put it into context, in less than a decade, China has moved from being the world’s 20th largest oil consumer to being the second biggest.”

Ross concluded:
“Whether this will be a 10 year super cycle, as some have claimed, or not, remains to be seen. But in the meantime, our advice to investors is to beware of getting caught up in the hype. The moneyspider.com Rating scores are excellent for all commodity based funds right now, but history has shown that what goes up like a rocket eventually falls like a stone. Investors would be wise to keep a regular check on these funds to ensure that they are alert to the point at which they start to come off the boil, and when they may need to consider moving their money.”

Last week was another week of records ../2     moneyspider.com Ratings Gold/Commodities/Resources funds  

Source: moneyspider.com/Financial Express, as at 3/5/06.

* Provisional rating allocated as no 3 or 5 year record.

 If you would like to discuss moneyspider.com in more detail, please contact:

Gordon Puckey
Phoenix Financial PR
Tel: 0207 947 2856
gordon@phoenixfinancialpr.co.uk

Notes to Editors

 Moneyspider Limited

 moneyspider.com provides investment research and funds information to private investors, helping them to make independent and informed decisions. moneyspider.com operates independent of any fund management group.

The moneyspider.com service was launched in April 2004, with a choice of paper based and online registration. Over the last year, the registration process has been streamlined and simplified and is now available only online.

moneyspider.com neither advises on nor sells investments . moneyspider.com does assist with switches or purchases on an execution only basis, and rebates 50% of any initial commissions to the investor, the other 50% retained to cover administrative costs.

The service is provided to the investor at no additional charge, being funded by the annual renewal commission usually paid by fund managers to financial advisers.

moneyspider.com targets any investor with an ISA, PEP, OEIC or Unit Trust who isn’t receiving impartial information on the performance of their funds, who isn’t getting a good ongoing service from their IFA or who doesn’t have an IFA.

 Moneyspider Limited is an appointed representative of Anthony, Bryant and Company (Investment Consultants) Limited, which is authorised and regulated by the Financial Services Authority.

How does it work?

 The Moneyspider Report presents the performance of each fund over 1, 3 and 5 years and gives investors a current valuation on all the funds they hold, at the same point in time.

The Moneyspider Rating® provides a unique assessment of the performance of each fund measured against four parameters, each analysed over one, three and five years (weighted towards the longer term) as follows:

Sector ranking: comparison with all other funds in the same sector (based on the sector definitions used by the Investment Management Association)

All Funds ranking: comparison with all 2,000 or so Unit Trusts and OEIC funds available to UK investors

FTSE 100: comparison of the total return of the fund with the total return of the FTSE 100 index, providing a consistent benchmark for each fund, and

Cash: comparison of the fund's performance with the return from an equivalent amount deposited in a 90 day access account.

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