Do Commodities Have a Place in Your Portfolio?

Pork bellies are used to make bacon, which is something you might find on a bacon, lettuce & tomato sandwich…

It’s hard to forget Randy & Mortimer Duke’s oversimplified explanation of commodity investing when speaking to Billy Rae Valentine played brilliantly by Eddie Murphy in the film “Trading Places” circa 1983.

But with the rate of inflation approaching 40-year highs, investors and consumers alike are seeking strategies to offset the debilitating effects of inflation.

The following article wrangles with the concept of how to approach this challenge effectively. The author (Ben Johnson, CFA) sets forth his case why using commodity funds might not generate the desired result despite recent increased investor allocations and commensurate fund flows.

At Conexus Capital Management, LLC, since the beginning of the pandemic, we have successfully utilized these types of commodity investments on a tactical basis. However, it is a complex question that certainly requires more analysis when viewed through the lens of a longerterm strategic allocation.

Analysis which is not quite as simple as a BLT sandwich…

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