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Navigating Hedge and Commodity Fund Participation in the New Normal

Delve into the dynamics of hedge and commodity funds in the ever-evolving market landscape. Explore index fund weightings, effects on the market, convergence concerns, regulatory risks, and conclusions on fund participation. For further inquiries, reach out to Sterling Smith.

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Navigating Hedge and Commodity Fund Participation in the New Normal

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  1. Index, Hedge and Commodity Funds Participation In The New Normal Presented by Sterling Smith

  2. Hedge Funds • Limited participation • Largely unregulated • Varying commodity influence • Not limited to futures only • Uses OTC products

  3. Traditional Commodity Funds • Limited participation • Actively managed and trades both sides of the market • Regulated

  4. Index Funds • A relative new player (Rogers fund was founded in 1998) • Generally long only • Subject to “hedge exemption” • Can be looked at as a passive investment.

  5. Index Fund Weighting • Crude Oil 21.00% • IPE Brent14.00% • Wheat 7.00% • Aluminum 4.00% • Copper 4.00% • Corn 4.75% • Heating Oil 1.80%

  6. Effects • Increase in Volume and Open Interest • Increase in Volatility • Record Prices in Many Commodities

  7. Convergence • Convergence, or the lack there of as been making a lot headlines. • Convergence is the general meeting of futures prices and cash prices at expiration.

  8. Regulatory Risk • CFTC and exchange • New provisions • Position limits • Time frame

  9. Conclusions • Fund participation most likely will not go away, if money is seeking the commodity markets it will find another vehicle or approach.

  10. Further Questions? Contact Sterling Smith at: 800-328-6530 or ssmith@countryhedging.com

  11. Right Decisions for the Right Reasons

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