Global Commodity Research
Commodity prices sold off across the board in January
Almost all commodity markets experienced falling prices during January - the MLCX TR index returned -7.85%, the S&P GSCI TR index posted -7.89% and the DJ-UBS TR index yielded -7.28%.
Energy prices decline in the first month of the year
Key energy benchmarks declined in January, with WTI crude oil, heating oil, gasoline and US nat gas prices all down. The MLCX Energy TR index returned -8.25% for January. In particular, WTI and Brent crude oil retracted from levels over $80/bbl early in the month and are now trading in the low $70s/bbl range.
Base and precious metals alike post negative returns
Industrial as well as precious metals fell in the month, with zinc being the worst performer. The MLCX Precious Metals TR index yielded -1.36% for January and the MLCX Ind Metals TR index returned -8.30% in the same period.
Among agricultural commodities, grains fell sharply
The grains and oilseeds sector fell sharply after the USDA surprised the market with a significant increase in production numbers for next year. The MLCX Grains TR index posted -12.39% for the month. Livestock was less affected, with the MLCX Livestock TR index at -0.93%. Sugar was the best performing commodity in the month and helped the MLCX Softs TR index gain 3.78% in the period.
A glance at the commodities asset management industry
In this note, we present a map of the commodity asset management industry, looking at 291 investment vehicles with $123bn in AUM. We estimate that 76% of actively managed broad-based hedge funds and mutual funds in our sample have generated positive alpha since inception (controlling for beta exposure). Yet, we also find that superior management skills can produce inefficient allocations when coupled with an inefficient benchmark. We show that fees are not linked to quality.
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