Global banking giant HSBC said its Saudi unit has launched a new open-ended Shariah compliant fund - HSBC Amanah Commodity Index Fund.

The objective of the fund over the long term is capital growth by investing in commodities in a Shariah compliant manner; whereby the Fund will track the performance of a commodity index, the bank said in a statement.

Commodities are raw materials used to create products from petroleum to household products. These include agricultural products (such as wheat & cattle), energy products (such as oil & gasoline) and precious metals covering gold, silver & aluminium, it stated.

Investing in commodities is supported by supply considerations, demand demographics and economic development trends, the statement from HSBC Saudi added.

Osama Shaker, managing director and head of financial markets at HSBC Saudi Arabia, said, 'We believe that in a global economy where complexity reigns, the commodities market remains the core of the world’s economic activities.'

'Moreover it offers portfolio diversification which is vital to maintain a well-diversified investment portfolio. It also offers inflation hedging; whereby raw material prices tend to reflect inflation.'

'And lastly, investing in commodities offer event risk hedging, where commodities are less likely to be affected by a single geopolitical event,' he added.-TradeArabia News Service