I have held an allocation of 5% commodities as a diversifier for some time; unfortunately all consisting of PTTRX, which is my worst fund by far and seems to do nothing but loose money, whether commodities prices are rising or falling. Any thoughts on a better fund which will provide some commodities exposure and maybe even not continuously loose value? I noticed PQTIX mentioned in another post. While I believe this is a managed futures fund rather than pure commodities, perhaps this would be a better alternative?
Joe
Comments
PTTRX is the Pimco Total Return bond fund. Your 5% commodity holding has another ticker symbol.
What is the full name of the commodity fund?
And yes, commodities of many types have had a tough time recently. But, commodities are many different animals.
Is your commodity fund a raw/basic materials fund or what?
The name and ticker symbol will help sort this.
As to PQTIX, yes this is a managed futures fund and a whole different critter and not related to a commodity fund.
What are your goals with your monies? Is this money taxable or non-taxable holdings?
Regards,
Catch
I know a properly diversified portfolio should have some commodities, but aside from doing good during the worst of times, the idea seems rather pointless.
With that said, there is not a hard rule that anyone needs commodities in their portfolio. Even going by the above suggestion, it is a hit and miss operation. Commodities are more of a trade than buy and hold for diversifying. The average portfolio in the SP500 has indirect commodity exposure with oil and energy companies, mining stocks and companies that deal with timber and live assets. That's probably all that anyone needs.
Regards,
Ted
M* Trading-Leveraged Commodities: Total Returns:
http://news.morningstar.com/fund-category-returns/trading-leveraged-commodities/$FOCA$LC.aspx
M* Trading-Inverse Commodities: Total Returns:
http://news.morningstar.com/fund-category-returns/trading-inverse-commodities/$FOCA$IC.aspx
M* Commodities Precious Metals: Total Returns:
:http://news.morningstar.com/fund-category-returns/commodities-precious-metals/$FOCA$CP.aspx
M* Commodities Broad Basket: Total Returns:
http://news.morningstar.com/fund-category-returns/commodities-broad-basket/$FOCA$BB.aspx
Hi Joe,
I am not by any means saying what I do is the right thing for everybody that reads this to follow. But, it is what I do.
Commodities fall in the broad sectors of materials and energy within the S&P 500 Index. It seems that you wish, like me, to target at least five percent of your asset allocation to the materials area. First, I did an Instant Xray analysis of my portfolio to see just how much I hold in the materials sector. Then if I am short I use a commodity or precious metal fund to supplement. The two funds that I currently use to do this are JCRAX and SGGDX. You might wish to do an Instant Xray on each fund to see how they are comprised. Currently, I hold about six percent in the materials sector with JCRAX and SGGDX combined accounting for about only one percent. So, if I sold them off I’d be back to about the five percent targeted base line in materials. I see gold and silver currently as a good long term buy since they are now selling for around, and back of, their all in cost to mine.
Since, materials are now out of favor with most in the investment community this, by my thinking, is an area of long range opportunity. So with this, I continue to target at least five percent to the materials sector and, at times, even more. Hopefully, over the next year, or so, the worm will turn and assets I bought that were out of favor will have appreciated. Know to, it can go the other way. So, I moderate and don’t try to make it all, so to speak, a one position bet on the “come line.” With this, I am also looking at other sectors for opportunity too.
For me there are four minor sectors within the S&P 500 Index. They are materials, real estate, communication services, and utilities. I strive at keeping at least a five percent allocation to each of these sectors. This leaves the seven others as major sectors in which I strive to keep at least a nine percent allocation to each of these. They are consumer cyclical, financial services, energy, industrials, technology, consumer defensive, and healthcare. When done, this leaves about seventeen percent of the allocation that can be positioned based upon how I am reading the markets and wish to position based upon a sector allocation out look.
Currently, I am one percent (overweight) in materials. I am about nine percent in energy and not carrying an overweight at this time. While in healthcare, technology, consumer cyclical, and financials I am three precent overweight in each. In utilities and communication services I am two percent overweight in each.
I hope this has provided you with some helpful insight as to how I position and to my thinking.
I wish you … “Good Investing.”
Old_Skeet