Posts Tagged ‘asset correlations’

Returns by Asset Class 1997 - 2006

It’s hard to look at this chart and not conclude that picking asset classes is difficult and that relative returns are not durable over time. Also, unsurprisingly, correlations between asset class returns are fairly high.

Until recently, the best way for individuals to gain exposure to commodities was through exchange-traded index funds such as IGE. Unfortunately, the exposure was indirect as you were essentially investing in the equity of companies that dealt in commodities. In the case of IGE, you were mostly holding the stocks of oil-companies. As of 2008, there are better commodity index funds, such as GSG (the Goldman Sachs Commodity Index) which gives you direct exposure to a broad array of commodities. Even better, GSG exhibits less correlation with almost every asset class when compared to IGE.