Deutsche Bank on Wednesday posted a pre-tax profit of €908 million for the first three months of 2020 – its best quarterly performance in seven years, and a notable increase on its profit of just €66 million for the same period in 2020.

Profits rose across all of the bank’s core divisions, though its investment banking arm performed most strongly with a 134% rise in pre-tax profits to €1.5 billion. Revenue across the bank grew 14% to €7.2 billion, its highest total since 2017.

CEO Christian Sewing attributed the strong results to effective risk management and tight control of costs. "Our first quarter is further evidence that Deutsche Bank is on the right path in all four core businesses, and is building sustainable profitability," he said. "In addition to substantial revenue growth over an already strong prior year quarter, we demonstrated cost and risk discipline."

Deutsche Bank’s strong quarterly performance is also significant in its avoidance of damage from the implosion of Archegos Capital Management. The family-run hedge fund collapsed in March and dragged down the profits of major banks tied to it. Credit Suisse made an immediate loss of $4.7 billion, while Morgan Stanley lost $1 billion and Nomura lost $1.43 billion.

However, Deutsche Bank made no mention of Archegos in its quarterly report despite being a client of the fund. The bank is understood to have conducted a relatively small amount of business with Archegos and exited positions quickly upon its collapse, minimising damages to its revenue.

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Shares in Deutsche Bank rose as much as 6% in early trading on Wednesday upon the release of the quarterly earnings report.

UBS reported on Tuesday a net income of $1.8 billion for the first quarter, revealing that it had taken a considerable hit to earnings from the collapse of Archegos Capital Management.

The Swiss bank said that it had taken a $774 million hit to revenue as a result of Archegos’s default earlier in the quarter. The hedge fund was a client of UBS’s prime brokerage business.

UBS added that it had ended all exposure to Archegos and that any related losses in the second quarter would be “immaterial”.

UBS CEO Ralph Hamers told CNBC on Tuesday that he was “very disappointed” by the loss, and that the bank is “taking it very seriously”.

“We have started a very detailed review of the different prime brokers’ relationships that we have … in order to really get the lessons learned and make sure we implement them so that going forward it doesn’t happen again,” he said.

Meanwhile, Nomura – Japan’s largest brokerage and investment bank – recorded a net loss of 155.4 billion yen ($1.43 billion) for the first quarter of 2021, its greatest quarterly loss since the 2008 financial crisis. Like UBS, its losses stemmed from exposure to the collapse of Archegos.

The collapse of the New York-based family hedge fund in March has resulted in immense damages for global banks. Credit Suisse, one of the first to report losses resulting from the implosion, took a hit of $4.7 billion.

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Between the UBS and Nomura announcements, total bank losses resulting from the collapse of Archegos are estimated to have reached $10 billion.

Credit Suisse on Thursday reported a net loss of 252 million Swiss francs ($275 million) for the first quarter following the implosion of US-based hedge fund Archegos Capital.

The bank reported that the loss reflected a “significant charge with respect to the US-based hedge fund matter in 1Q21 (first quarter), offsetting positive performance across wealth management and investment banking.”

In response, the bank raised roughly $2 billion to bolster its capital position. To do this, it sold mandatory convertible notes to "a selected group of core shareholders, institutional investors and ultra-high-net-worth individuals."

In total, Credit Suisse has issued notes that will convert into 203 million shares in the bank. Half of these will convert in six months’ time at a 5% discount against the market rate.

Archegos Capital, a relatively unknown family office in New York, collapsed last month after making a series of highly leveraged bets on media and tech stocks. Credit Suisse, which dealt with the firm, was rocked by the collapse; the bank made an immediate loss of 4.4 billion Swiss francs ($4.7 billion) and dumped $2 billion worth of stock to end its connection with Archegos. The bank also overhauled its leadership, with Chief Risk Officer Lara Warner and investment banking head Brian Chin stepping down in the aftermath of the loss.

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The $4.4 billion loss provision wiped out a 30% jump in Credit Suisse’s revenues for the first quarter, powered by an 80% revenue increase in its investment banking arm. The bank’s loss contrasts starkly with its 1.2 billion franc profit in the same quarter last year.

Credit Suisse is not the only major bank to have made significant losses on the collapse of Archegos. Last week, Morgan Stanley revealed a loss of almost $2 billion despite a 150% profit increase in the first quarter.

Morgan Stanley on Friday disclosed a loss of almost $1 billion from the collapse of private fund Archegos Capital Management, undercutting an otherwise upbeat 150% jump in first-quarter profit.

The Wall Street giant was one of six banks that had exposure to Archegos, a family office fund run by controversial former hedge fund manager Bill Hwang. Last month, Archegos defaulted on margin calls and triggered a stock fire sale.

In a call with analysts, Morgan Stanley CEO James Gorman said the bank initially lost $644 million on stocks it held related to Archegos’ positions, which it sold. It then decided to “derisk” its remaining positions, triggering the loss of a further $267 million.

"I regard that decision as necessary and money well spent," Gorman said.

Other firms hit by the collapse of Archegos include Credit Suisse, which estimated its losses from the event to reach $4.7 billion, and Nomura, which flagged a loss of $2 billion. The fund’s implosion is now being probed by a number of US watchdogs, as well as the Senate Banking Committee.

Shares in Morgan Stanley were down more than 1% in premarket trading after news of its losses broke. However, the bank’s overall results easily beat expectations, spurred on by a spike in trading volumes partly led by the Reddit-driven “meme stock” frenzy around companies such as GameStop and AMC Entertainment.

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Morgan Stanley reported a net revenue jump of 61% to $15.72 billion. Net revenue applicable to shareholders rose to $3.98 billion, or $2.19 per share, as of 31 March.

Credit Suisse will overhaul the leadership of its investment bank and risk division following the collapse of hedge fund Archegos Capital, which the firm estimates will cost it $4.7 billion.

In a statement on Tuesday, the firm said it would take a hit of 4.4 billion Swiss francs from “the failure by a US-based hedge fund to meet its margin commitments”. The hit will likely undo “the very strong performance that had otherwise been achieved” and set the lender on course for a 900-million-franc loss in the first half of 2021.

Credit Suisse was one of several lenders acting as prime broker for family office Archegos Capital, run by controversial former hedge fund manager Bill Hwang. The firm collapsed last month after several large leveraged bets failed to pay off.

Credit Suisse dumped $2 billion worth of stock to end its exposure to Archegos. It also announced that Chief Risk Officer Lara Warner and investment banking head Brian Chin would step down follow the losses.

In addition to the hit taken from Archegos, Credit Suisse has also been caught up in the implosion of Greensill Capital, a major supply chain finance firm that also collapsed last month. Credit Suisse ran funds worth a total of $10 billion that invested in debt instruments generated by Greensill Capital. The funds were suspended after Greensill’s collapse.

The firm has yet to calculate the cost of its involvement with Greensill Capital.

“The significant loss in our Prime Services business relating to the failure of a US-based hedge fund is unacceptable,” Credit Suisse CEO Thomas Gottstein said in a statement. "In combination with the recent issues around the supply chain finance funds, I recognise that these cases have caused significant concern amongst all our stakeholders."

However, Gottstein expressed optimism for the future of the company. “Serious lessons will be learned. Credit Suisse remains a formidable institution with a rich history,” he said.

Sezer Sherif, founder and CEO of investment group Vector Capital, outlines the role of hedge funds and their role in the market.

GameStop Corp is an ailing Fortune 500 company, headquartered in the US, that offers a range of games and entertainment products across ten countries. In January, the company was embroiled in what was widely reported to be a “David and Goliath” battle between large hedge funds and small investors.

This was because the price of the company’s share suddenly and unexpectedly started to skyrocket in value, defying the exceptions of Wall Street traders. They had sought to make a profit by selling large volumes of the company’s shares in order to push their share value down. These “short-sellers” would then bet on a decline by selling borrowed shares in the hope of repaying at a lower price.

Unfortunately for them, investors from the Reddit forum Wall Street Bets saw the opportunity to buy the shares at a bargain price and started a campaign to push them back up again. The result was billions lost by some major players on the stock market and a few Wall Street Bets users becoming millionaires. Regrettably many amateur investors, not heeding professional advice and caught up in the media excitement, bought GameStop shares just before they crashed, which resulted in them losing their hard-earned savings.

The takeaway from this event is that investing in the stock market can be an enjoyable and a profitable experience, but only when performed correctly. Those attracted by the GameStop hype or wanting to become the next “Wolf of Wall Street" will quickly become undone, or fail to take more suitable opportunities, if they do not take the time to fully understand what they are getting into.

What is a hedge fund?

At its simplest, a hedge fund is simply a way to invest in the stock market with the aim to create money for its creators and investors. They are regulated by the Financial Conduct Authority (FCA).

UK hedge fund managers are required under the Financial Services and Markets Act 2000 to gain approval to establish a new fund. They must also demonstrate adequate financial resources and appropriate staff, systems, and controls to manage the fund.

At its simplest, a hedge fund is simply a way to invest in the stock market with the aim to create money for its creators and investors.

Once approved, a hedge fund manager will invite investors to pool their money in order to fund one large portfolio in accordance with their set strategy, which is then spread across many investments. Whether that be real estate or emerging markets such as the BRIC economics – Brazil, Russia, India, and China.

This minimises risk and is also a lot simpler than buying shares individually or directly from a company. Investor returns are typically generated as dividends or interest distributions. In return the hedge fund managers will receive a performance fee, which can be as much as 20% of the fund’s profits.

How do they work?

It is commonly accepted that Alfred W. Jones is the father of the hedge fund industry. While working at Fortune magazine, Jones wrote an article titled “Fashions in Forecasting” (FIF) in which he had an insight that that would make investing more profitable and less risky. This is achieved by “hedging”.

There are many different types of hedge funds and their managers invest according to different goals and strategies. They are similar, though, in their desire to make money in spite of market fluctuations. They achieve this by holding both long and short stocks.

Imagine the fictional IT company, the Acme Corporation, invents a quantum computing chip that will vastly increase computing power as we know it. This will likely mean its share value will increase while that of its nearest and less innovative competitor will drop. A textbook hedging strategy by a hedge fund manager would be to go long on the Acme Corporation, while shorting its rival, with investments of the same value.

If the value of the IT industry increases, you will generate a return on your investment in the Acme Corporation that should outweigh the loss of having invested in the competitor. Alternatively if the IT industry goes down in value you would lose money from Acme Corporation but make it from its competitor.

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By hedging both sides, a hedge fund manager can insure against risk but at the cost of greater profit.

What do they offer to consumers?

Investing in a hedge fund led by a highly experienced and performing hedge fund manager can deliver some excellent returns on your initial investment but you may be exposed to greater levels of risk than other means of investment.

Remember that hedge funds are typically utilised by large companies, but high net-worth individuals can and do invest in them. Unfortunately, the sums required are often beyond the means of the average retail investor. The alternative is for them to invest in a “fund of funds”. This is a fund that invests in other mutual funds or hedge funds and provides retailers with the advantages associated with broad diversification at minimal risk. They are also a great way to access to an investment vehicle that might not have otherwise been accessible. For the privilege though, there is typically an additional layer of fees to be paid.

Before you invest in a hedge fund, you must make sure you are prepared and suitable (financially) for the venture. Due to the large role they play in managing your money, you also want to make sure any hedge fund manager is qualified to do so. Finally, always read through their sales literature so you understand the nature of the risks and returns you may receive. If you are in any doubt if the fund is suitable for you then seek independent financial advice.

With Wall Street hedge funds’ practice of short-selling stocks coming into focus as one of the causes of the GameStop craze, those interested in following the story will want to know the basics of the strategy and how it is used to make money by identifying companies in decline.

At its core, short-selling is a simple (if risky) process which beginner investors may want to steer clear of until they have grown more experienced at identifying market trends.

The Concept

Short-sellers take the “buy low, sell high” mantra of regular trading in reverse. They first identify a stock or other asset that they expect will decrease in value down the line. They then borrow shares of this stock from a brokerage and immediately sell them to another investor willing to pay the market price. These borrowed shares must be returned by the expiration date of the brokerage’s loan.

The trader in this instance is hoping that the price of the shares in question will go down after they have been sold, allowing them to purchase them back at a lower price. The difference between the initial sale and the buyback makes up the short-seller’s profit – or loss.

In a hypothetical scenario, a trader could believe that XYZ Company stock is overvalued at $100 and decide to bank on its price going down. They borrow 100 shares and sell them for $10,000, becoming “short” 100 shares, and wait. A week later, reports of XYZ’s poor performance begin to spread, and its stock deteriorates to $50. At this point the trader buys 100 shares back and returns them to the lender.

Ignoring possible costs associated with the short position (as explored below), the trader in this case would gain $5,000 from buying their shares back at half the price for which they initially sold them.

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There are some technical factors involved with short-selling to consider too. Opening a short position requires a trader to have a margin account; different brokers will have their own set of qualifications an account must meet before they allow margin trading. Traders will also likely pay interest on the value of their borrowed shares while their position remains open, and may of course need to pay a commission fee depending on their choice of brokerage.

The Risk

Short-selling is fundamentally different from standard equity trades. When you buy stock with the expectation of selling it higher, but the price doesn’t go the way you expected, the maximum loss you will make is equal to the value of the stock you purchased.

This is not the case when you bet for the stock’s price to go down. As there is no limit to how high a stock’s value may rise, you stand to make technically infinite losses should you misjudge your position. While large financial organisations may be able to cover such losses through other avenues, smaller investors can and have gone bankrupt by placing short positions on stocks that then ballooned, which is why most traders are advised to avoid them – or at least not to concentrate in them.

Some investors also see an ethical issue with short-selling stocks, as it carries the perception of “betting against the home team”. While shorting itself does not necessarily damage a company, and some economists argue it can provide liquidity and drive down overpriced securities, a more harmful variant of the practice involves traders taking a short position before spreading malicious disinformation about a company to drive its stock down. This “short and distort” tactic has grown in usage as social media has made it easier for investors to communicate and share stock tips.

It is unclear whether the firms that recently shorted GameStop did so maliciously, though Citron Research – one of the hedge funds at the heart of the craze – has now pivoted away from publishing “short reports” altogether following trader backlash to the practice, focusing instead on long position opportunities.

Leaders of House and Senate committees responsible for financial industry oversight are planning to hold hearings regarding the conduct of trading platform Robinhood after it froze purchases of shares in GameStop and other equities that have been boosted by an unprecedented wave of online retail investment.

On Thursday morning, Robinhood blocked investors from purchasing shares in GameStop, AMC, Bed Bath & Beyond, BlackBerry and Nokia, which have become the subject of unprecedented rallies over the past few days as small retail investors flocked to companies being bet against by hedge funds.

Users were left unable to buy further stock, though they were still permitted to sell their positions. The platform also raised margin requirements for specific trades and cancelled stock orders placed the previous night.

“We continuously monitor the markets and make changes where necessary,” Robinhood said in a press release before markets opened. “In light of recent volatility, we restricted transactions for certain securities to position closing only.”

Lawmakers as far apart on the political spectrum as Representative Alexandria Ocasio-Cortez and Senator Ted Cruz condemned the decision of Robinhood to "block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit."

"We must deal with the hedge funds whose unethical conduct directly led to the recent market volatility and we must examine the market in general and how it has been manipulated by hedge funds and their financial partners to benefit themselves while others pay the price," said Maxine Waters, chair of the House Financial Services Committee.

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Robinhood was not the only broker to freeze purchases in the volatile stocks, with Schwab, M1, Public and Webull also temporarily curbing trades. Shares in GameStop and AMC fell 44% and 57% respectively following the platforms’ new restrictions.

However, Pfizer wasn’t the only company to benefit from a successful trial. Shortly after the announcement, we saw a stock market boom. The Dow Jones Industrial Average in America was up by more than 1,000 points on Monday and the FTSE 100 in the UK ended the day 276 points higher, a rise of 4.67%. So, with news emerging that a working vaccine is on the horizon, what will the next six months look like for hedge fund managers and investors? Let’s take a look.

How do Hedge Fund Managers View the Pandemic?

Although news of the Pfizer vaccine is positive, it does not signal an end to the current ways of working and living. After all, this is only one trial, and even if the vaccine continues to be successful, the distribution of the vaccine will still take around a year. As a result, it’s unsurprising that many hedge fund managers still expect that the coronavirus pandemic will still negatively affect their investments. Overall, 86% believe that the pandemic will have either a ‘negative’ or ‘very negative’ impact.

That being said, the vaccine news is still a huge positive. Due to this, if the successful trials continue, the vaccine may change the outlook of hedge fund managers as long as they adapt their strategy in order to take advantage of opportunities that emerge in a post-COVID world.

What Sectors will be Popular Investment Options?

Due to the fact that the vaccine will first be given to vulnerable people over the pension age, it seems likely that the ‘new normal’ work from home dynamic will continue for at least the first half of next year. As a result, expect tech stocks to receive significant investment. The vaccine news actually caused Zoom stock to plummet by 15%, but this may be short-sighted given that the vast majority of us will still rely heavily on this form of tech in the next 6-12 months. Plus, if the virus fundamentally changes the way that we conduct business, and working from home becomes the norm in some industries, then this technology may be here to stay.

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Similarly, for many people, the coronavirus pandemic has changed our relationship with our bodies and our minds; particularly because self-isolation and lockdown have made us think more about how we look after ourselves without gym access. As a result, expect well-being providers such as Peloton to build on the 350% growth they’ve seen this year.

Finally, it’s important to remember that the Pfizer vaccine is just one of the options available, and we’re still waiting to hear trial results from other vaccine providers such as AstraZeneca, Janssen, and Valneva. Should their trials also be successful, expect their stock prices to skyrocket on the announcement.

In summary, although hedge fund managers still believe that the pandemic will have a negative impact on their funds, the Pfizer vaccine provides us with a glimmer of hope that life may return to normal by the spring. As a result, for hedge fund managers and investors, this hope presents an opportunity. By adapting their strategy to purchase stocks in areas likely to see growth such as tech and well-being, proactive hedge fund managers may be able to overcome at least some losses and could potentially come out of the pandemic unscathed.

Cryptocurrency hedge funds have made significant gains through 2020, vastly outperforming non-crypto funds.

Crypto Hedge Fund Vision Hill Composite Index, launched in 2018 to track the performance of actively managed cryptocurrency hedge funds, showed a 126% return in 2020. At the same time, BarclayHedge – which tracks over 7,1000 hedge funds – reported that non-crypto hedge fund sectors were also in positive territory, but posted comparatively modest gains of 1.70% through September.

One of the reasons behind crypto funds’ strong performance during 2020 stems from the emergence of decentralised finance, or DeFi, according to Vision Hill CEO Scott Army. “DeFi” refers to crypto platforms that facilitate lending outside of traditional banking institutions. These sites run on open infrastructure and make use of algorithms that track supply and demand to set rates in real time.

Data from industry site DeFi Pulse showed a total of $11.1 billion worth of loans on DeFi platforms as of Thursday, an increase of 180% from the roughly $4 billion recorded in August.

Michael Anderson, co-founder of $100-million venture capital fund and DeFi investor Framework Ventures, said that he believes DeFi will soon break into the mainstream. “Users are trying to vote with their dollars in terms of how they view the capabilities of DeFi,” he said, noting that some DeFi platforms have gained more volume than the far larger digital asset exchanges.

Hedge funds were also boosted by the strength of bitcoin. After a record market slide in March, the currency bounced back quickly, jumping more than 10% in April and going on to rise 80% above its 2019 price. The surge drove rallies in the crypto market, with a knock-on effect on hedge funds.

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Adding to crypto’s attraction, large-scale organisations have entered the market this year, accelerating the progress of crypto’s adoption into the mainstream. Earlier this month, PayPal announced plans to allow the trading and holding of cryptocurrencies on its platform. This triggered a new surge in the value of bitcoin, which jumped above $13,000 following the news.

You can invest in the stock market directly, meaning when you decide when, how much, and in what way you invest.

For that, you need to have experience in trading on the stock market, the necessary information on market developments, a short-term and long-term strategy, the necessary accounts and trading tools, and most importantly - investment assets.

You can also invest in the stock market through investment funds, which is much more comfortable.

Investing in the Stock Market or Not

This has become a rhetorical question these days. Investing in the stock market is the best way to fertilise your capital and finally make your capital work for you. However, it’s necessary to know how to invest directly in the stock market, and to approach it extremely carefully and only after generous preparations.

If you don’t have the necessary knowledge to be able to invest in the stock market on your own, the best option available to you is through investment funds. Anyone who engages in trading on the stock market and doesn’t have the necessary knowledge is doomed to failure, and even worse - will lose all their invested money.

About 80% of trading on the stock market is done by insufficiently professional traders. That’s why there’s always a great opportunity to make money on the stock market.

Direct Investment in the Stock Market

Direct investment in the stock market means that investors independently hire brokers to whom they give instructions for buying or selling items with which they want to trade on the stock market. They are offered many opportunities: from trading the best shares in the UK, raw materials, derivatives (financial), currencies, cryptocurrencies…

In this sea of offers, investors need to decide what they want to trade with because each of these products requires a different tactic, parameters, trading rules, etc.

In addition to this, it’s necessary to decide the dynamics of trading. This refers to the dynamics with which they want to monitor changes in the stock market. From changes at the level of seconds to changes at the level of days, weeks, or months. The faster the dynamics, the greater the knowledge and self-control required.

Direct Investment Costs

Investing in the stock market isn’t cheap. In addition to the funds you’re willing to invest, it’s necessary to take into account the investment costs, which aren’t small at all. They are different in relation to the amount of planned investment, trading dynamics, conditions under which you start investing…

The most common costs to count on are the cost of opening a trading account, the cost of a broker, the cost of the stock market, the cost of buying, the cost of selling, the cost of taxes, and the cost of withdrawing funds. All of these costs can take away the profits you make through trading, and it’s extremely difficult to make a net profit.

And note: direct investment isn’t recommended for so-called “small“ investors.

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Investing in the Stock Market Through Investment Funds

Investing in the stock market through investment funds is truly the most comfortable way to invest. The investment fund, as a collective investment institution, is designed to help “small“ investors to participate in world markets under the same conditions as “large“ investors. Funds of investment fund members are collected and invested under previously agreed conditions (investment fund prospectus).

The costs are calculated as if invested by one investor and are divided among the members of the investment fund. This reduces investment costs and most of the funds are invested.

Advantages of Investing Through Investment Funds

Investing in stock markets through investment funds has many advantages over direct investing. Let’s list some of them:

• Reducing investment costs
• Provided professional investment management by portfolio managers
• Monitoring market movements by consulting firms
• The possibility of investing in several types of products
• Portfolio diversification by industries, currencies, and geographical diversification
• The ability to choose the risks you want to accept
• Constant control of your investment
• Maximum liquidity of funds
• Cost-benefit transparency

Reducing Investment Risk

The risk of investing in the stock market is always present. We can’t avoid it but we can define and diminish it.

• Defining risk means determining exactly how much risk you’re willing to accept, and therefore how much profit you expect from your investment.
• Risk reduction is achieved by diversifying investments, while the risk is higher if you’ve invested in a smaller number of products.

If you want low risk, you’ll invest in a money market fund, which invests only in bills, bonds, bank deposits, and the like. If you’re willing to accept a higher risk, you’ll look for a balanced fund, which invests part of the money in bonds and part in shares.

For investors who accept even greater risk, the chosen fund is an equity fund. For investors who want a high level of risk, the right choice are hedge funds, Forex, and cryptocurrencies.

Investors around the world choose commodities as a means of either advancing their trading strategies or hedging against investments in stocks, forex or cryptocurrencies. But which commodities are they choosing?

In this article Finance Monthly discusses five of the best, looking at the current market conditions and how things might change in the near future. But first we’ll discuss why you might want to trade commodities.

Why Choose Commodities?

Commodities usually reflect trends in the world at large, and so are a good vehicle for those with their finger on the pulse of international markets and political conditions. They are also generally inversely correlated to the stocks and shares market, making them a useful means of protection from risk in your other investments.

You could even use them to hedge against forex trades, provided you use a trading platform that gives you fast and reliable access to as many markets as possible.

And when it comes to choosing commodities to trade, these are the five that we believe you should know about in 2018:

1. Brent Crude

With tension continuing across the oil-producing world and growth predicated in emerging markets, this commodity is a good choice for the rest of this year. In fact, the Goldman Sachs Group Inc. has given Brent Crude an ‘overweight’ recommendation for the current period, meaning that they believe this is a commodity worth adding to a trading portfolio.

2. Natural Gas

High output in countries such as the US and Russia has continued to keep prices lower than they should be for natural gas, but this could change – especially towards the tail end of the year when the Northern Hemisphere moves into winter and demand increases. In fact, demand for natural gas is already outstripping supply in China, and this will surely have repercussions on the price of this commodity worldwide.

3. Copper

Disruptions in mining output, coupled with urgent demand from the electric car industry, have caused the prices of copper to soar recently. This trend may not continue with such force, but over the course of 2018 prices are expected to rise 9.7% from 2017 levels. In other words, copper is still a commodity you should definitely know about.

4. Palladium

This commodity is used in vehicle catalytic converters, and so enjoys demand from the automotive industry. As the trend of converting from diesel to unleaded petrol and hybrid electric continues, so too should the price of palladium rise. Palladium has even started to reach the price levels of platinum, giving just some indication of how in demand this commodity is.

5. Zinc

A top performer in 2016 and 2017, this base metal is beset with supply problems which could see it to another strong year in terms of price growth. Another factor is demand from the Chinese market, which looks set to continue its increase for Zinc and similar commodities.

Of course, there are other commodities to watch in 2018, but these five commodities should provide a good starting point for building a strong investment portfolio.