12 Dec 2011
A report by Barclays Capital has shown that investors have increased their allocations to commodities dramatically over the past decade. While most investors approach commodity investing through passive benchmark investments, recent years have seen broader awareness of alternative commodity strategies aimed at providing additional sources of return in the asset class.
Commodities markets are unique in their investment characteristics. The segmentation of market participants and fundamental risk factors are the underlying driving forces of structural excess return strategies, the report shows.
Systematic commodity strategies can be classified according to Curve, Value, Trend, Liquidity and Volatility styles. Most of these strategies can be understood as risk premia strategies; they provide market-neutral excess returns as compensation for exposure to particular systematic risks. Barclays states that understanding the drivers of systematic commodity strategies is essential to the design of more complex strategies.
Commodities markets are unique in their investment characteristics. The segmentation of market participants and fundamental risk factors are the underlying driving forces of structural excess return strategies, the report shows.
Systematic commodity strategies can be classified according to Curve, Value, Trend, Liquidity and Volatility styles. Most of these strategies can be understood as risk premia strategies; they provide market-neutral excess returns as compensation for exposure to particular systematic risks. Barclays states that understanding the drivers of systematic commodity strategies is essential to the design of more complex strategies.
