Sources: Bloomberg, Parametric as of 12/31/2020. It is not possible to invest directly in an index.
Unlike traditional asset classes, commodities don’t have a “market cap” equivalent. As a result, each commodity index provider constructs benchmarks according to its own unique example. While no benchmark is superior to another, they often exhibit sector concentrations, particularly when it comes to crude oil and agriculture. Parametric avoids these concentrations by broadly diversifying across commodity types and sectors, including significant allocations to non-index commodities. That gives investors access to underrepresented commodities and increases overall portfolio diversification. We reweight the portfolio to reduce concentration risk and dynamically rebalance through time to reinforce diversification. Our rebalancing techniques seek to enhance potential returns while minimizing implementation friction.
Diversification, intelligently designed
