Natural Resources
2024 Curriculum
CFA Program Level I
Alternative Investments
Refresher reading access
Overview
Natural resources comprise commodities and raw land used for agricultural purposes, specifically farming and timber. Managing this asset class requires specialized knowledge of the features of natural resources. An increasing number of portfolios include natural resources, which justifies a separate examination of the sector. There has been rapid development in offering indirect investment in natural resources through exchange-traded funds (ETFs), limited partnerships, REITs, swaps, and futures.
Commodities, such as crude oil, soybeans, copper, and gold, are seen as investments. Investments in commodities can be either “hard” (those mined, such as copper, or extracted, such as oil) or “soft” (those grown over a period of time, such as livestock, grains, and cash crops, such as coffee).
Timberland investment involves ownership of raw land and the harvesting of its trees for lumber, thus generating an income stream and the potential for capital gain, and timberland has been included in large institutional portfolios for decades. Farmland as an investment is a more recent phenomenon, with only a few dedicated funds involved. With population growth, weather, and water management becoming more topical, however, investors may turn to these assets to actively address sustainability.
Commodities, such as crude oil, soybeans, copper, and gold, are seen as investments. Investments in commodities can be either “hard” (those mined, such as copper, or extracted, such as oil) or “soft” (those grown over a period of time, such as livestock, grains, and cash crops, such as coffee).
Timberland investment involves ownership of raw land and the harvesting of its trees for lumber, thus generating an income stream and the potential for capital gain, and timberland has been included in large institutional portfolios for decades. Farmland as an investment is a more recent phenomenon, with only a few dedicated funds involved. With population growth, weather, and water management becoming more topical, however, investors may turn to these assets to actively address sustainability.
0.75 PL Credit
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