Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
FYI: The asset class with the worst performance over the past 10 years is collateralized commodity futures (CCFs). For example, from 2008 through 2017, PIMCO’s Commodity Real Return Strategy Fund (PCRIX) not only underperformed the Vanguard 500 Index Fund (VFIAX) by 13.7 percentage points, it lost 5.2% a year. Regards, Ted http://www.etf.com/sections/index-investor-corner/swedroe-dont-count-out-commodities?nopaging=1
I think of commodities as the the raw materials of manufacturing and production. As these commodity prices dropped and stayed low many users of these raw materials have seen improvements to their operating expenses (transporter, manufacturers, and consumers). Many treat an increase in commodity prices as a pass through cost so in the end it will be the consumer who pays for those increases much like they have reaped the benefits of low inflation. Technology has played an additional role in adding efficiencies to systems and these efficiencies have acted as extinguisher of inflation.
The sourcing, the scarcity, and the periodic disruptions of the delivery of commodities (man made as well as natural) will remain recurring short term problems.
I like @rono 's suggestion..."Invest in what you use (what you are a consumer of)". If you end up paying more for something (as a result of commodity inflation or any other worrisome inflation) your ownership in those companies may help offset those pass through costs.
Also, this sector seems impacted by the weakness or strength on the currency that it is being valued in. We often forget that the currency may be playing a part in its valuation.
Comments
The sourcing, the scarcity, and the periodic disruptions of the delivery of commodities (man made as well as natural) will remain recurring short term problems.
I like @rono 's suggestion..."Invest in what you use (what you are a consumer of)". If you end up paying more for something (as a result of commodity inflation or any other worrisome inflation) your ownership in those companies may help offset those pass through costs.
Also, this sector seems impacted by the weakness or strength on the currency that it is being valued in. We often forget that the currency may be playing a part in its valuation.