In September’s Hedge Fund Journal, Sussex Partners’ Jim Neumann and Pablo Urreta discuss the advantages and benefits of a long/short investment approach to commodities in order to access the under-invested asset class and benefit from the uncorrelated returns via diversified, actively managed portfolios.
The article details this evolutionary approach’s improvement over indices and stand-alone single manager exposure to commodities. It also points out the many hedging attributes commodities provide for an institutional portfolio such as dealing with inflation, geo-political risk, and changes in business cycles. While the low correlation and hedging characteristics of a multi-manager commodity exposure is very attractive, Mr Neumann and Mr Urreta convey that the real draw is the reliable return stream created when accessing commodities in this thoughtful way.
A copy of the full article can be found here: Long-Short Commodity Investment for Diversified Portfolios_An Attractive Proposition, and welcome any feedback you may have.