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White Papers |
Quarterly Commentary |
Strategy Overview |
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Investing in Commodities: |
The Growing Trend Towards Commodities Exposure |
Active Commodities Product Overview Q2 2010
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Active Commodities |
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| For more than a decade, institutional investors have increasingly sought broad commodities exposure to improve portfolio diversification, help protect against unexpected inflation, and participate in the bullish long-term outlook for the asset class. Although passive index-linked commodity strategies traditionally have been a popular way to gain exposure to the asset class, some institutional investors are moving toward active management for their commodity allocations. In this paper, GE Asset Management’s commodities investment team, which has been actively managing commodities since 2006, examines how actively managed commodity strategies can potentially allow managers to fully exploit individual commodities markets on an opportunistic basis, utilize roll yield management to protect capital in contangoed markets, and generate more alpha than passive strategies while providing the beta that an allocation to commodities can provide. Risk considerations for commodity investors are also discussed. |
In the context of modern portfolio theory the objective of most investors is first, to use a portfolio on the so-called “efficient frontier” that is commensurate with their return/risk preferences and second, to find ways to shift this efficient frontier toward more return and less risk. This may explain why investing in commodities to improve a portfolio’s risk return tradeoff is gaining wider acceptance among institutional investors. This article discusses the growing interest in this asset class as a potential portfolio diversifier, the investment characteristics of commodities, various strategies, available benchmarks, sources of return, and ways to gain more active exposure to this unique asset class. |
Read our most recent commentary on commodities, which discusses drivers of recent performance and our current market outlook. |
Listen to
Nick Koutsoftas, Senior Vice President and Portfolio Manager of Active Commodities, review the approach he and his team are using to invest in the asset class. Click here to view and listen to the presentation. |
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GE Asset Management In The NewsClick on the links below to read selected articles featuring the launch of the GE Active Commodities Strategy (subscriptions required): |
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Fundfire |
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Investment and Pensions Europe |
GE Lights Up New Commodities Strategy |
GE Pension Trust’s active commodities strategy unlocked by Richard Lowe (May 6, 2010) |
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