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I currently own GLD, HSTRX ....sold SLV last fall (who knew it would get superhyped by Reddit? etc). For any of you using or allocating to Commodities, what are you using? Performance has been been rough for a few years but looking at those type of asset classes for opportunities and to diversity further.
I spent a lot of time a couple years ago looking at this issue. the funds that track various indices are pretty heavily in energy, especially oil. I decided that if I wanted to invest this heavily in oil, I could buy individual stocks or an energy fund. I looked in some detail at actively managed funds and tried to avoid ones that had large fees ( although they all are expensive)
I finally picked Silverpepper Commodity Fund SPCAX and have been satisfied. It has handily beaten the category and most commodity indices.
Their web page is rather sparse but will show you that they are invested mainly in agricultural commodities now. M* has very little update information unfortunately.
An alternative is to pick large ETFs focused on various commodities and buy a basket of them that meets your objectives
Good grief! SPCAX has a turnover ratio of 4,249% according to M*. Maybe @msf’s legion of fact checkers/researchers could compute the average holding period for a typical position given that number. IIRC, a 20% TOR results from holding a position for 5 years.
One newsletter I read has DBA and DBC in its portfolio for exposure to ag and “stuff”. I’ve never owned either one. Elsewhere I read that catalytic converters are disappearing from parked cars because of their rare metals content. Signs of a bubble or social commentary re: the new normal?
Elsewhere I read that catalytic converters are disappearing from parked cars because of their rare metals content. Signs of a bubble or social commentary re: the new normal?
Prices for the precious metals used in catalytic converters have increased significantly.
"From about $500 an ounce five years ago, the price of palladium quintupled to hit a record of $2,875 an ounce last year, and is now hovering between $2,000 and $2,500 an ounce, above the price of gold. Rhodium prices have skyrocketed more than 3,000% from about $640 an ounce five years ago to a record $21,900 an ounce this year, roughly 12 times the price of gold."Link
If you are open to the idea of Basic Material VMIAX has performed very well. It's top 10 positions make up 50% of the fund, but it covers 115 companies that are in the Small, MID, and Large Cap space. ER is .10%
Good grief! SPCAX has a turnover ratio of 4,249% according to M*. Maybe @msf’s legion of fact checkers/researchers could compute the average holding period for a typical position given that number. IIRC, a 20% TOR results from holding a position for 5 years.
This is one of your more opaque funds, with derivatives, shorts, and 25% of assets in the management company's Cayman Islands subsidiary. And the turnover figure presented represents only a small portion of the portfolio (the few "vanilla" holdings). So I'm afraid that any turnover calculation (even if I could decrypt all of this) wouldn't be meaningful.
From the annual report: "The Commodity Strategies Global Macro Fund may invest up to 25% of its total assets in the subsidiary, a wholly-owned and controlled subsidiary formed under the laws of the Cayman Islands." M* reports 25.11% of the portfolio in "Cayman" as of June 30th.
The Commodity Strategies Global Macro Fund's portfolio turnover rates for the fiscal years ended June 30, 2020, and June 30, 2019 were 4,249% and 5,463%, respectively. ... As defined, the portfolio turnover rate calculation may only include the turnover of "securities" within the Fund’s portfolio .... The calculation does not include the turnover of other instruments in which the Fund more commonly invests, such as commodity futures instruments and other derivatives. The portfolio turnover rate, therefore, only provides a turnover rate on a narrow portion of assets purchased and sold within the Fund’s overall portfolio. The Advisor estimates that if futures contracts and derivatives were included in the calculation, the portfolio turnover ratio for the fiscal year ended June 30, 2020 would have been lower
One would certainly hope that the turnover rate for the whole portfolio is lower!
A few numeric oddities that one doesn't need to be an accounting expert to see:
the cheaper Institutional shares have underperformed the Advisor shares by 0.02% over the past one and three years;
while the website says: "[the Advisor] share class includes an explicit 0.25% shareholder servicing fee", the prospectus reports a 0.20% fee; and
the investor class shares have "other" fees that are 0.19% higher than the advisor class fees (per prospectus)
Thanks for digging all that out, @msf. For some reason reading that arcane stuff is amusing. It makes me wonder what sort of people work at a fund like that and whether they ever come out from behind their bank of monitors to glimpse the sunlight. I don’t know much about my fund managers and their day-to-day routines, yet I imagine them to be relatively sane.
While I agree that SPCAX's fees are high and its turnover also shockingly so, show me another commodity fund that is as actively managed as this one. And that active management has paid off, especially with regard to avoiding the downturn in oil. Ironically, commodities are one of the sectors I think most in need of active management as there really isn't a proper index that truly represents what occurs in the commodity markets, but it is also one of the sectors where there is so little real active management. There is usually indexing or quantitative tweaks of indexes. The indexes most funds track are all artificial constructs, not truly representative of the commodities market like, says, the Russell 3000 for U.S. stocks. These indices attempt various things--such as capturiting commodity output or consumption which is not the same thing as commodity futures trading--but because of the odd nature of futures contracts and spot prices, which are so different from stocks, indexing for the most part doesn't work as well as the backtests would have us believe in most cases. Yet this fund's fees are too high. And that turnover, despite the fact that futures trading requires more turnover, is still very high.
And that turnover, despite the fact that futures trading requires more turnover, is still very high.
From the SAI: The [turnover] calculation does not include the turnover of other instruments in which the Fund more commonly invests, such as commodity futures instruments
Hence my statement that "any turnover calculation (even if I could decrypt all of this) wouldn't be meaningful."
With monthly expirations, it would not surprise me to see a 1200% turnover ratio, were futures included in the calculations. That's still a far cry from the very high 4,000-5,000% ratios of this fund, which might be describing the small amount of stocks and bonds that sometimes (and very fleetingly) show up in the portfolio.
Comments
I finally picked Silverpepper Commodity Fund SPCAX and have been satisfied. It has handily beaten the category and most commodity indices.
Their web page is rather sparse but will show you that they are invested mainly in agricultural commodities now. M* has very little update information unfortunately.
An alternative is to pick large ETFs focused on various commodities and buy a basket of them that meets your objectives
Barrons had a article on Commodities recently.
https://www.barrons.com/articles/commodities-are-starting-to-rally-here-are-the-stocks-and-funds-to-play-it-51611958101
One newsletter I read has DBA and DBC in its portfolio for exposure to ag and “stuff”. I’ve never owned either one. Elsewhere I read that catalytic converters are disappearing from parked cars because of their rare metals content. Signs of a bubble or social commentary re: the new normal?
"From about $500 an ounce five years ago, the price of palladium quintupled to hit a record of $2,875 an ounce last year, and is now hovering between $2,000 and $2,500 an ounce, above the price of gold. Rhodium prices have skyrocketed more than 3,000% from about $640 an ounce five years ago to a record $21,900 an ounce this year, roughly 12 times the price of gold." Link
VAW has no minimum.
From the annual report: "The Commodity Strategies Global Macro Fund may invest up to 25% of its total assets in the subsidiary, a wholly-owned and controlled subsidiary formed under the laws of the Cayman Islands." M* reports 25.11% of the portfolio in "Cayman" as of June 30th.
From the SAI: One would certainly hope that the turnover rate for the whole portfolio is lower!
A few numeric oddities that one doesn't need to be an accounting expert to see:
From the SAI: The [turnover] calculation does not include the turnover of other instruments in which the Fund more commonly invests, such as commodity futures instruments
Hence my statement that "any turnover calculation (even if I could decrypt all of this) wouldn't be meaningful."
With monthly expirations, it would not surprise me to see a 1200% turnover ratio, were futures included in the calculations. That's still a far cry from the very high 4,000-5,000% ratios of this fund, which might be describing the small amount of stocks and bonds that sometimes (and very fleetingly) show up in the portfolio.