Any contrarians for commodity futures?

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Topic Author
am
Posts: 4233
Joined: Sun Sep 30, 2007 9:55 am

Any contrarians for commodity futures?

Post by am »

Anyone investing with funds like Pimco commodity futures fund being near all time lows? Maybe with the 5% of portfolio used for speculation?
leonard
Posts: 5993
Joined: Wed Feb 21, 2007 10:56 am

Re: Any contrarians for commodity futures?

Post by leonard »

am wrote:Maybe with the 5% of portfolio used for speculation?
Why would someone intentionally relegate 5% of their portfolio to a non-optimal strategy?
Leonard | | Market Timing: Do you seriously think you can predict the future? What else do the voices tell you? | | If employees weren't taking jobs with bad 401k's, bad 401k's wouldn't exist.
staythecourse
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Joined: Mon Jan 03, 2011 8:40 am

Re: Any contrarians for commodity futures?

Post by staythecourse »

Like any other asset or subasset you have to understand the advantages, disadvantages, and how it interacts with the rest of the assets in making up your portfolio. Commodities are no different. I definitely would not consider adding it just because it has hit lows or not include it if it was at highs. That is market timing and only leads to ruin!!

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle
jdb
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Joined: Wed Dec 05, 2012 7:21 pm

Re: Any contrarians for commodity futures?

Post by jdb »

Years ago invested over 2 percent of portfolio in that asset class as inflation protection but gradually went to less than 1 percent before liquidating, and not because of increase in portfolio size. So no thanks, will leave any asset class with large amount of derivatives to others.
Tigermoose
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Re: Any contrarians for commodity futures?

Post by Tigermoose »

I use DBC to add some unexpected inflation protection, especially as relates to supply side shocks. Eventually I hope to add some more intermediate bonds that will hopefully negatively correlate with this commodities futures fund. I'm waiting for QE to end and the Fed funds rate to "normalize". I have lossed a few thousand as the price of oil has plummeted, but nothing that I can't handle. In the long run, I think commodities futures can play a valuable role in your portfolio. I will probably buy more of DBC in January when I rebalance (I rebalance in January and July of every year).
Institutions matter
Topic Author
am
Posts: 4233
Joined: Sun Sep 30, 2007 9:55 am

Re: Any contrarians for commodity futures?

Post by am »

Poor returns for a while, funds at all time lows, oil dropping, few to no threads on here regarding adding CCFs. Seems to me like a strong buy signal. Maybe one of the few cheap assets? Would be a good time to buy if this makes sense for your portfolio.
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oneleaf
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Joined: Mon Feb 19, 2007 4:48 pm

Re: Any contrarians for commodity futures?

Post by oneleaf »

The expense ratio in addition to the zero return on collateral (T-bills) for this asset class sure hasn't helped, even without the contango issue. Past several years were definitely the worst circumstances for this asset class, but diversification seems to be working to some degree. I still believe in the asset class, but end of 2013, I made a change from DBC/USCI CCF funds to Vanguard's precious metals fund. I know they are very different, but I decided to go with a PME fund as I expect it will have diversification benefits while providing a higher expected return.

On the other hand, I wonder if we can really say CCF's are cheap. It all really depends on the roll yield. Low spot prices don't mean CCF's are cheap unless we are in a state of expected backwardation, with positive roll yield on the futures. That is really the only source of returns we can ever expect with zero return coming from the collateral. Anyone who follows this market have any insight?
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