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High inflation prompts commodity fund comeback

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Persistently high inflation around the world has prompted a revival in the fortunes of commodity funds, according to a report by The Financial Times.

The report says that data from Citi reveals that after years being largely out of favour with investors, funds investing in raw materials such as oil and wheat drew in net inflows of $38.7 billion in the year to 10 May.

Commodity prices have soared this year as pandemic supply chain disruptions were compounded by a squeeze on oil and gas supplies over the winter, pushing the broad S&P GSCI index in March to its highest level since 2008.

The price of grains, cooking oils, energy and fertiliser have all soared in the wake of Russia’s invasion of neighbouring Ukraine causing a big spike in inflation.

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