Sawyer Capital ManagementFinancialization And Commodities – Sawyer Capital Management https://www.sawcap.com Evolutionize Web Site Tue, 14 Nov 2017 19:30:19 +0000 en-US hourly 1 https://wordpress.org/?v=5.1.22 Financialization And Commodities https://www.sawcap.com/2015/08/24/financialization-and-commodities/ https://www.sawcap.com/2015/08/24/financialization-and-commodities/#respond Mon, 24 Aug 2015 09:00:51 +0000 http://evolvemypractice.com/?p=2173 Slightly more than a decade ago, several studies were published raising the possibility that an allocation to commodities (in the shape of fully collateralized futures) could improve the efficiency of a portfolio due to the diversification benefit (the low to negative correlation of commodities to both stocks and nominal bonds) provided through including this asset...

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]]> Slightly more than a decade ago, several studies were published raising the possibility that an allocation to commodities (in the shape of fully collateralized futures) could improve the efficiency of a portfolio due to the diversification benefit (the low to negative correlation of commodities to both stocks and nominal bonds) provided through including this asset class.

The publication of these papers was closely followed by a dramatic increase in the demand for commodity investments, and Wall Street responded by creating a host of new alternative investment vehicles. Between 2004 and 2008 alone, it’s estimated that at least $100 billion moved into commodity futures. This increase in investor demand has led to what’s been called the “financialization” of commodities markets. As is always the case, an increase in demand impacts prices and expected returns.

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