How Hard Is It To Pick Winners In The Commodities Market?

2013 was a really terrible year for commodities, as flagging  demand worldwide ate into prices. Just four major commodities – natural gas, oil, palladium and,  barely, zinc saw year-over-year price gains, according to the “commodities  quilt” below from U.S. Funds. Growth  in the top performer, natgas, which climbed 33%, diverged 66% from the worst  performer, corn, which fell 23%.

That may seem extreme, but it’s  been worse: in 2006, the disparity was almost 200 percent between winning nickel  and losing natural gas. It’s also importants to  recognize that annual returns for each commodity can be quite volatile. That’s  why the pattern of colors in the quilt is so chaotic. “The price movement of commodities is historically both seasonal and cyclical,” wrote the folks at U.S. Funds. “That’s why when investing in natural  resources, we believe it is important for your portfolio to hold a diversified  basket of commodities and to be actively managed by professionals who understand  these specialized assets and the global trends impacting them.”

commodities quilt

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