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  #1  
Old 04-12-2007, 11:37 PM
Preem Preem is offline
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Default Alternate asset classes

Anyone who is familiar with the concept of alternate asset classes, but hasn't acted on them, might be interested in these funds. Alternate asset classes can reduce the volatility and risk of an investment portfolio without significantly lowering return.

CVSIX
DBC
DBV
GSG
HSGFX
JAMNX
MERFX
PCRDX
PRPFX
SWHIX
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  #2  
Old 04-13-2007, 01:32 AM
DesertCat DesertCat is offline
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Default Re: Alternate asset classes

[ QUOTE ]
Alternate asset classes can reduce the volatility and risk of an investment portfolio without significantly lowering return.

[/ QUOTE ]

Says who? Over what periods? And how would those studies showing decent returns for commodities change if they ended 5 years ago instead of now? Why did Julian Simon say that the long term price trend for all commodities was lower?
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Old 04-13-2007, 02:47 AM
kimchi kimchi is offline
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Default Re: Alternate asset classes

I think a managed commodities/futures account has a place in a diversified portfolio, but individual commodities/commodity indexes aren't really a buy & hold proposition.
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Old 04-13-2007, 02:34 PM
NajdorfDefense NajdorfDefense is offline
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Default Re: Alternate asset classes

[ QUOTE ]
I think a managed commodities/futures account has a place in a diversified portfolio, but individual commodities/commodity indexes aren't really a buy & hold proposition.

[/ QUOTE ]
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Old 04-13-2007, 04:34 PM
maxtower maxtower is offline
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Default Re: Alternate asset classes

Whats the long term return for commodity futures?
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  #6  
Old 04-13-2007, 11:12 PM
Preem Preem is offline
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Default Re: Alternate asset classes

[ QUOTE ]
Whats the long term return for commodity futures?

[/ QUOTE ]
Over a 45 year period, the return on commodities futures is comparable to that of stocks. Slightly lower or higher, depending on the time frame you choose.

The reason that it helps to reduce risk is that the movement of commodities futures is not strongly correlated with that of stocks.

If you can find different asset classes that offer comparable returns, but whose short-term volatilities are not strongly correlated, then you can reduce the overall risk in your portfolio without significantly harming overall return.

As DC pointed out, raw commodities are a losing proposition, but commodities futures are a completely different asset class, and that's the interesting one. Futures are the subject of the research paper cited in this article,
http://www.dailyreckoning.com/Featur...esFutures.html
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  #7  
Old 04-14-2007, 03:37 AM
maxtower maxtower is offline
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Default Re: Alternate asset classes

Do any of the funds you mention specifically trade commodity futures without being heavily weighted towards any single commodity, like oil for example?
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  #8  
Old 04-14-2007, 07:07 AM
Preem Preem is offline
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Default Re: Alternate asset classes

DBC and PCRDX appear to be the least concentrated funds. PCRDX tracks the Dow Jones commodity index and specifically limits investments in any one commodity to 33%.

On the other hand, GSG is heavily weighted in oil, about 75%.
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Old 04-14-2007, 09:00 AM
TLC TLC is offline
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Default Re: Alternate asset classes

It seems the discussion has concentrated on the commodity index funds in the list. What are people's thoughts on the equity hedge funds listed? Should there a place in one's portfolio for Long/Short or Market Neutral funds?
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  #10  
Old 04-14-2007, 12:20 PM
Preem Preem is offline
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Default Re: Alternate asset classes

[ QUOTE ]
It seems the discussion has concentrated on the commodity index funds in the list. What are people's thoughts on the equity hedge funds listed? Should there a place in one's portfolio for Long/Short or Market Neutral funds?

[/ QUOTE ]
For a highly diversified portfolio, I believe that long/short and market neutral funds have a place as long as they go up over the long term and move out of lockstep with the other asset classes.

I was rather puzzled as to why the DBV currency futures fund seems to move in concert with the S&P 500 (^GSPC). I realize that the S&P 500 has a lot of foreign business exposure, but it's not clear as to why this would affect currency futures.

Chart of DBV vs. ^GSPC

Can anyone explain this?
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