Commodities: Demystifying their Importance

By Kevin Chambers

Much speculation in the financial media has been made as to why the Federal Reserve has not yet taken action on increasing interest rates. The Fed has claimed that sluggish commodity prices are a reason for their hesitation. The leading index for aggregate commodity prices, the Bloomberg Commodity Index, has lost -1.6% for the first half of 2015. In fact, it has lost every year from 2011 to now, making commodities the lowest performing major asset class over the last 5 years.

Of the 37 benchmarks Headwater Investments tracks through our Due Diligence process, the commodities index is the only benchmark to have a negative 5 year and 10 year annualized return at -3.9% and -2.6%, respectively. 

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