Topic Tags: Commodities

Commodities Position Paper

Explores commodities as an investment, focusing on investment vehicles, the sources and attributes of historical risk and return, and commodities’ place in an investment portfolio.

Skyrocketing commodity prices combined with the poor performance of equities have led to an increased interest in commodity allocations. Commodities have not historically been part of an institutional investor’s asset allocation, and some even question whether commodities are an asset class.

This paper will explore commodities as an investment, focusing on investment vehicles, the sources and attributes of historical risk and return, and commodities’ place in an investment portfolio. Commodities as an investment are introduced and then the mechanics of long-only futures positions are explained. Next, the drivers of individual commodity returns and portfolios of commodity positions are examined. Finally, commodities are analyzed in the context of a balanced portfolio.

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Commodities: Institutional Asset Class Ascending

A briefing on the commodities asset class and key points from our newly published position paper.

Skyrocketing commodity prices combined with the poor performance of equities have led to an increased interest in commodity allocations. Commodities have not historically been part of an institutional investor’s asset allocation, and some even question whether commodities are an asset class.

Register now to join us for a live webinar to discuss commodities as an institutional asset class with senior research analyst Eric Przybylinski and director of research Greg Leonberger. We’ll explore commodities as an investment, focusing on investment vehicles, the sources and attributes of historical risk and return, and commodities’ place in an investment portfolio.

We’ll brief participants on key points from our newly published position paper, including:

  • An introduction to commodities as an institutional asset class
  • The mechanics of long-only futures positions
  • Drivers of individual commodity returns and portfolios of commodity positions
  • Commodities as part of a balanced portfolio

 

Live Webinar – Thursday, March 1, 2012 – 1:00 PM CT

Please contact us for access to this video.

Dispersion of Commodity Returns

For all the press coverage of rising gold and oil prices, commodity prices during the first half of 2011 showed a tremendous degree of dispersion across different sectors. Silver saw the greatest increase in value as it rose by more than 12%, but wheat fell by more than 26%, thus creating a spread between best and worst of almost 40%.

For all the press coverage of rising gold and oil prices, commodity prices during the first half of 2011 showed a tremendous degree of dispersion across different sectors. Silver saw the greatest increase in value as it rose by more than 12%, but wheat fell by more than 26%, thus creating a spread between best and worst of almost 40%. Despite hitting a price of $1,600 / ounce earlier this week, gold rose by less than 6% through the first 6 months of 2011; in fact, only 6 of the 14 commodities on the chart actually increased in price. The main take away from this chart? Commodity investors must have a keen understanding of their underlying exposures, as the large dispersions of individual commodity returns can lead to vastly different results across products and strategies.