The Organization of Petroleum Exporting Countries (OPEC) has seen its influence over the global energy market wane in recent years, as a prolonged economic downturn caused demand for oil to plummet, limiting the effectiveness of the group’s once eagerly-anticipated supply decisions. But with a seemingly stable recovery underway and many emerging markets demonstrating an insatiable thirst for raw materials and energy, OPEC once again finds itself in a position of power. The bloc of oil rich nations didn’t hesitate to flex its muscles on Wednesday, showing that its decisions are still capable of impacting oil markets. [click to continue…]
It’s difficult to put a finger on the exact cause of the recent surge in popularity of commodity investing. More than likely, the boom is attributable to a number of different factors. Correlation between international equity markets (and even between stocks and bonds) has surged in recent years, increasing both the importance and difficulty of adding non-correlated assets to investor portfolios. Given the relatively weak correlation with other asset classes, commodities have found a home in many investors’ portfolios. Moreover, unprecedented injections of liquidity into the financial system have created anxiety over a coming uptick in inflation that could erode returns to stocks and fixed income instruments. Commodities have historically served as an effective inflation hedge, and many are once again turning to natural resources to protect assets from a surge in the CPI. [click to continue…]
After surging from about $35 per barrel at the end of 2008 to $70 at the halfway point of 2009, crude oil traded within a relatively tight range of $70 and $80 for the last eight months. But many analysts have become bullish on oil prices in recent weeks, anticipating a rally spurred by seasonal [...]
ETFs finished February range-bound, as most equity markets remained choppy to finish the week. This came after continued weakness in the euro zone and some disappointing news on the jobs front, with 20,000 additions to the list of people seeking unemployment benefits. In other news, AIG reported a $8.87 billion quarterly loss, raising concerns that [...]
Over the last year, a tremendous increase in the amount of ETF education has significantly reduced the likelihood of misuse by professional or amateur investors. By now, hopefully everyone knows that the United States Natural Gas Fund (UNG) doesn’t actually buy and hold natural gas and that USO’s underlying assets don’t include barrels of crude [...]
On Monday, news of coordinated bomb attacks in Baghdad made headlines around the world, highlighting the ongoing violence that continues to grip Iraq. Also on Monday, the government reported that the man known as “Chemical Ali,” one of the most ruthless allies of Saddam Hussein, was executed for crimes against humanity. Receiving far less attention [...]
After a chaotic 2008, most financial markets regained some degree of normalcy in 2009, as unprecedented volatilities subsided and a gradual calming of anxieties led to the return of rational trading. But for exchange-traded commodity products 2009 was a rather tumultuous period, as expectations for increasingly stringent regulations swirled and correlations began to break down. [...]
As the ETF industry has expanded in recent years, a significant portion of growth has come from the tremendous rise in popularity of exchange-traded commodity products. In addition to broad-based funds such as DBC or DJCI, several commodity-specific products have accumulated billions of dollars in assets, and several were even among the very largest of [...]
The last two years have forced investors to reevaluate many of the relationships within financial markets that have historically guided investment decisions and shaped portfolio strategies. Massive stimulus plans have created unprecedented amounts of liquidity, which has in turn caused traditional correlations between asset classes to break down. The notion that developed economies will lead [...]
In 2009, crude oil prices have surged from about $35 per barrel to nearly $80, making this a good year for many in the oil business. The Organization of Petroleum Exporting Countries (OPEC) has been one of the main beneficiaries of a recovering global economy, as a return in demand for crude has translated into [...]
The United States Natural Gas Fund (UNG) has been one of the most perplexing exchange-traded products of 2009. The fund has lost almost 60% so far this year, but has seen cash billions of dollar in cash inflows ($5.4 billion through November, well more than the $4.0 billion in total assets the fund had at [...]
The reasons for the rise of the ETF industry are numerous: intraday liquidity, (potentially) superior tax efficiency, and enhanced transparency relative to traditional actively-managed mutual funds have all contributed to the billions of dollars of inflows that these funds have seen in recent years. But the real attraction for most ETF investors is the reduced [...]
