Getting to grips with commodities

Investors looking to diversify their portfolios should turn to commodities, having got to grips with shares and bonds, says Merryn Somerset Webb.

We've written over the last few weeks about the most common asset classes available to investors shares and bonds. Until quite recently, that was all most people felt they needed. The general consensus was that you invested in a mix of the two based on your age: the older you were, the less risk you wanted to take, and the higher a percentage of bonds you held in your portfolio.

Then in the 1980s professional investors started paying attention to the success of those who branched out a bit, such as David Swensen, who took over as chief investment officer at Yale University in 1985. Swensen's Yale Model appeared to offer consistently high returns: in the ten years to 2009 he made a good 11% a year. How? By diversifying into different asset classes and particularly into "real" assets that are harder to buy and sell than stocks and bonds (which you can trade on an exchange in a second). Assets such as energy, timber and property.

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Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.