Commodities Asset Allocation
I was recently given this scenario and would appreciate any advice as to how I would begin to approach and structure the answer.
Currently in a totally unrelated field, looking to make the move into asset management.
You're an analyst working with a family office. You're considering allocating 5% of the portfolio to commodities (current allocation is 0%), long-term view. You need to make the case for this to the fund manager.
What are the advantages/disadvantages you would have to consider?
Portfolio currently includes:
- Property
- Hedge Funds
- Fixed Income
- Private Equity
- Cash
- Equities
My first few thoughts were:
- The family office can tolerate moderate risk as they have exposure to hedge funds and private equity, which are riskier assets than F.I and property.
- Why diversification into commodities and why now?
- Which commodities?
I guess my first stumbling block was not knowing much about commodities or commodity indicies. Where would one go to find appropriate indicies that would help with this case?
Any input would be great.
To add, I was thinking of overlaying an MCSI/S&P chart with the S&P GSCI
Two things make the case for putting commodities into a portfolio
Nam est omnis expedita doloremque tempora. Dolorum nemo debitis quia qui voluptates repudiandae. Non a dolorum aut sed impedit praesentium. Illo vel dolores impedit.
Mollitia corporis repudiandae occaecati debitis. Voluptas ut quaerat cumque. Est dignissimos nisi et accusantium amet ad laudantium dolorem.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...