Commodities gaining favor as investors diversify portfolios
Author
Published
2/6/2017
As 2016 unfolded, commodity indices were coming to the end of their window to put in a three-year low. Various forces unfolded to bring an end to the steep slide over the prior two years.
But among those forces was a renewed interest in putting money in commodities. The risks of a decline in equities were growing, and long-term bond yields were historically low.
Hence, money managers started moving money into other sectors, including commodities, to diversify their portfolios. Over the first nine months of 2016, the amount of passive, long-term investment money (mostly in index funds) grew from $161 billion to $243 billion.
Before the November election, and maybe the OPEC agreement to rein in output, the foregone conclusion was that 2016’s rallies in commodities and commodity indices may have been "bear market rallies."
But both of the above-mentioned events changed those attitudes quickly. If ...
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