Alternatives

Reappraising the case for commodities

Commodities have been one of the star performers of 2016, yet investor sentiment has rarely been more negative.

09/20/2016

Commodities have been one of the star performers of 2016, yet investor sentiment has rarely been more negative. Previous poor performance means they remain one of the few asset classes globally that can lay a claim to being cheap. However, as the author uncovers, commodities are not only cheap in a historic context, but also in relation to equities and their marginal costs of production. With this in mind, commodities may not only provide a reliable hedge against rising inflation, but the author believes that they can offer significant
diversification benefits by improving expected risk-adjusted return prospects, especially under the proper active stewardship.


The views and opinions contained herein are those of Schroders’ investment teams and/or Economics Group, and do not necessarily represent Schroder Investment Management North America Inc.’s house views. These views are subject to change. This information is intended to be for information purposes only and it is not intended as promotional material in any respect.