Commodities emerged as the second best performing major asset class, after equities, in 2009, and have maintained their position as the best performing major asset class over the past ten years, the latest report by ETF Securities (Australia) shows.

The best performing commodities last year turned out to be metals tied to the industrial cycle with ETFS Physical Palladium, up 114 per cent, followed by ETFS Physical Silver, up 57 per cent, then ETFS Physical Platinum up 63 per cent, the research said.

On a relative basis, commodities either matched or outperformed real estate and cash and bonds during the year. This was driven mostly by a surge in emerging market demand within the automotive industry, causing platinum and palladium prices to rise.

ETFS Physical Gold prices were also up 25 per cent in 2009, as more investors sought new ways to boost their wealth following the global financial crisis. Gold proved to have the best returns of 275 per cent and the lowest volatility of 18 per cent, followed by platinum, 230 per cent and 24  per cent, and silver 219 per cent and 30 per cent, respectively.

Alternative investments like equities and commodities have been gaining popularity over the past months, paving the way for new types of wealth management strategies that go beyond the rather rocky banking industry.

"The holdings of physically backed ETCs were steady even during periods of price decline, indicating inflows are largely from investors building strategic long term holdings of ‘hard assets’ to hedge against inflation and currency risks," said Nigel Phelan, the ETFS head of sales Australia and New Zealand, in a statement.

"The positive long term supply demand fundamentals are also a key draw card,” he added.