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Commodity

A well-diversified portfolio goes beyond equities and fixed income. An allocation to commodities helps to diversify your institution’s portfolio while also providing some inflation protection.

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Parametric’s Commodity Strategy uses a unique portfolio construction process that provides greater diversification than traditional commodity benchmarks. Through intelligent design and rules-based methodologies, the strategy seeks to outperform the Bloomberg Commodity Index by 1.5% to 3% over three to five years while experiencing 90% to 95% of the index’s volatility.

Opinions offered constitute our judgment. There is no guarantee that investment objectives will be achieved. Investing in a commodities strategy involves risk. All investments are subject to loss. Learn more.

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The value of commodity investments will generally be affected by overall market movements and factors specific to a particular industry or commodity, which may include weather, embargoes, tariffs, health, political, international, and regulatory developments. Economic events and other events (whether real or perceived) can reduce the demand for commodities, which may reduce market prices and cause their value to fall. The use of derivatives can lead to losses or adverse movements in the price or value of the asset, index, rate, or instrument underlying a derivative due to failure of a counterparty or to tax or regulatory constraints.

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Why choose Parametric?

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$376B+

Total firm
AUM



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$5.6B

Commodity
AUM



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30

Years of equity, derivative,
and strategy experience



As of 6/30/2022

How it works

Parametric Commodity aims to avoid concentrations by diversifying across multiple commodity types and sectors, including allocations to non-index commodities. This gives investors access to underrepresented commodities and enhanced diversification. The portfolio is constructed based on a system of target weights. We assign commodities to exposure tiers based on market liquidity, with each commodity in a tier receiving equal weight. Finally, we modify these target weights to reduce unintentional concentrations that might be introduced otherwise.
We maintain target weights and allocations through regular rebalancing. These rebalancing activities exploit the volatility and low correlations of commodities by systematically selling when prices go up and buying when they go down, seeking to harvest a rebalancing alpha.
We avoid risky investments by investing collateral in US Treasury instruments. This arises from the belief that returns should be driven by commodity exposures, not the collateral pool.

Intended benefits of Commodity Strategy

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Inflation protection

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Commodity prices are correlated with inflation. An allocation to commodities acts as an inflation hedge.

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Exposure

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Our long-only strategy lets investors fully capture the characteristics of the commodity asset class. 

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Transparency

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Our Commodity Strategy uses an easy-to-understand rules-based methodology to avoid human bias.

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Diversification

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Our investment process maintains diversification  across commodity types and sectors and gives you exposure to commodities not traditionally included in most indexes. 

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This Material Is Intended for
Institutional Investors Only


By clicking Agree, you acknowledge that you have read the terms detailed below. You also confirm that you are a qualified institutional investor or a consultant to qualified institutional investors and wish to proceed. Parametric does not provide legal, accounting, or tax advice or consulting service.



The information on this area of the Parametric Portfolio Associates® LLC (“Parametric”) website is intended for qualified institutional investors and their consultants. This information is not intended for accredited investors in any jurisdiction outside the United States in which the distribution or sale of Parametric investment services is not authorized.

It is published for informational purposes only and does not purport to address the financial objectives, situation, or specific needs of any investor. If you do not qualify, the information shown on this site (which may include information about our investment strategies and products, market commentary, and composite performance) may not be relevant or appropriate for you. Certain solutions discussed in these materials will be subject to minimum investment amounts and other restrictions that apply. There can be no assurance that any investment product or strategy will achieve its investment objectives or that there will be any return of capital. Performance may be volatile, and investors could lose all or a substantial portion of their investment.



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