12.12.2014 - Why Conventional Commodity Indexes Will Likely Disappoint
I hate to pile on commodities funds, already beaten down by years of underperformance and outflows, but most are terribly flawed in both construction and premise. The static, long-only commodity futures indexes do not capture the biggest sources of profits that accrue to investors in commodity futures. In fact, unlike with stocks and bonds, a long-only position in commodity futures is not always expected to provide an excess return above the risk-free rate. To understand why, it helps to think of the commodities futures market as an insurance market, where hedgers and speculators trade risks...............................................Full Article: Source
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