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[ SECTOR PROFILE ]
exposure and owns the WisdomTree
Broad Commodities ETC. Because
he runs a fund of funds, he can own
any listed instrument, but warns the
options are more limited for managed
and model portfolio services.
“There are few platforms that allow
clients to access listed securities, such
as closed-ended funds and ETFs,” he
says. “If you are on a platform that
only provides exposure to open-ended
funds you will be very limited in your
exposure to commodities. This is
because what you will end up with is
exposure to commodities as equities,
such as producers. Therefore you start
to unwind the benefits of risk, return
and correlation.”
Angell agrees, noting the returns of
open-ended commodity funds will
vary significantly from the underlying
commodity prices. For example, while
the BlackRock Gold & General fund
and a gold ETC are both up about 15
per cent in the first four months of
the year, “the journey has been very
different for the two strategies”.
“If you are on a platform
that only provides exposure
to open-ended funds you
will be very limited in your
exposure to commodities”
“Exchange traded products
give access to the futures
market, which is fine if
you want to have more of a
trader’s mentality and are
expecting fairly short-term
price moves”
James de Bunsen, multi-asset
portfolio manager at Janus
Henderson, only holds gold and
a long/short commodity futures
strategy in his funds. He argues that
beyond precious metals, commodities
are “troublesome” to access in an
efficient way.
“Exchange traded products give
access to the futures market, which
is fine if you have more of a trader’s
mentality and are expecting shortterm
price moves,” he says.
“However, they are not great for
longer-term holding periods due to
the inherent ‘roll’ costs of selling the
front month future and rolling into
the next contract.”
De Bunsen also stresses it is difficult
to make money in commodities
unless there is a persistent bull
market in which price rises
overwhelm costs. He says the dearth
of commodity hedge funds today is
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