Regular commodities watchers might know it, but not everyone does: passive investing is a tricky business. In crude oil, for example, there’s the roll – when one month’s contract expires, the shift to the next month (which in the current, contango market structure is more expensive) means it costs more money to maintain the same holding.
This chart from Reuters shows that since January, the investor in a fund tracking Goldman Sachs’ Commodities Index would have made 12 per cent while the spot returns were almost 45 per cent:
H/T&nbps;Wall&nbps;Street&nbps;Manna
Related links:
Why buy-and-hold can be a disaster in commodities (FT Alphaville, 07/10/09)
