Evaluating Commodity Exposure Opportunities

38 Pages Posted: 9 May 2015

See all articles by Frank Benham

Frank Benham

Meketa Investment Group

Edmund Walsh

Meketa Investment Group

Roberto Obregon

Meketa Investment Group

Date Written: May 5, 2015

Abstract

Commodities as an asset class have been in growing demand over the last 40 years, as investors that have traditionally held portfolios of stocks and bonds seek the ‘equity-like’ returns along with diversification potential and inflation hedging characteristics available through commodities investment. However, perhaps due to their relative complexity and the large remaining disagreements in the current literature about the fundamental drivers of commodities returns, investors do not universally agree on the merits of commodity investments. This paper begins by reviewing the existing theories and fundamental drivers of returns from commodity investments to better understand the risks that commodity investors are compensated for bearing. From this perspective we will evaluate existing methods of commodity investing with a focus on why the risk premia these strategies capture are likely to persist in the future.

Keywords: commodity, commodities, investing, roll, momentum

JEL Classification: G00

Suggested Citation

Benham, Frank and Walsh, Edmund and Obregon, Roberto, Evaluating Commodity Exposure Opportunities (May 5, 2015). Available at SSRN: https://ssrn.com/abstract=2602885 or http://dx.doi.org/10.2139/ssrn.2602885

Frank Benham (Contact Author)

Meketa Investment Group ( email )

100 Lowder Brook Drive, Suite 1100
Westwood, MA 02090
United States

HOME PAGE: http://www.meketagroup.com/

Edmund Walsh

Meketa Investment Group ( email )

100 Lowder Brook Drive, Suite 1100
Westwood, MA 02090
United States
781-471-3500 (Phone)

HOME PAGE: http://www.meketagroup.com

Roberto Obregon

Meketa Investment Group ( email )

United States

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