Commodities were the top performing asset in the past year, driven by a surge in the US dollar.
The asset class returned 22 per cent in the period, the only one to generate a double digit return, according to Interactive Investor and Morningstar.
The price of commodities was boosted by the strong US dollar, as well as the surge in the price of grains and livestock.
Gold, normally seen as a safe asset, lost 3 per cent in US dollar terms, and global infrastructure was down 4 per cent.
UK equities just managed a positive year, returning 2 per cent, ahead of cash which returned 1 per cent.
However it was a bad year for bonds, with global bonds crashing 17 per cent and UK gilts and UK index-linked bonds dropping 21 and 31 per cent respectively.
UK property performed particularly poorly, losing 32 per cent.
Head of markets at Interactive Investor, Richard Hunter, said commodities being at the top of the pile in performance terms may surprise some.
“The oil price is ahead by just 5 per cent in the year to date (earlier in the year it was up around 50 per cent), while the prices of both gold and copper are down.”
One of the reasons for this has been the strength of the US dollar, in which commodities are priced, he added, and which has an inverse relationship to commodity prices (a higher dollar can buy more of the commodity, so the price falls).
At the same time, Chinese demand for commodities (perceived and actual) has drastically reduced on the back of local Covid-19 outbreaks and subsequent restrictions, placing something of a stranglehold on the economy.
“These so-called “hard” commodities are not the reason for the 33.8 per cent rise overall.
“The outperformance is driven by the strength of “soft” commodities, which is basically a term for those which are grown rather than mined – sugar, corn, wheat, cocoa, fruit and coffee, for example, as well as livestock,” he said.
“Supply chain blockages – particularly in Europe and exacerbated by the Russia/Ukraine conflict – have elevated prices sharply, affecting the overall returns from commodities”.
sally.hickey@ft.com
