The idea that the commodities market have become “financialized” is not a new one. We wrote about the topic last year. In the intervening time period the evidence has continued to pile up showing that commodities now more than ever are acting like other financial assets. This simple fact has reduced, if not eliminated, their much-touted benefits as portfolio diversifiers. The big banks have helped this trend along the way and commodities now are the fastest growing part of their business. Hedge funds have also piled on as evidence mounts that they trade commodities the same way they do other assets. Look for more investors to focus on managed futures in an attempt to capture some measure of diversification. In today’s screencast the financialization of commodities rolls on.
Items mentioned in the above screencast:
More on the financialization of commodities. (Abnormal Returns)
The financialization of commodities has weakened the case for their diversification benefits. (FT)
Are hedge funds to blame for trading commodities like equities? (All About Alpha)
In search of crisis alpha: a short guide to investing in managed futures. (CME Group)