Index, Hedge and Commodity Funds

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Index, Hedge and Commodity Funds

• Participation In The New Normal
• Presented by Sterling Smith

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Hedge Funds

• Limited participation
• Largely unregulated
• Varying commodity influence
• Not limited to futures only
• Uses OTC products

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Traditional Commodity Funds

• Limited participation
• Actively managed and trades both sides of the
  market
• Regulated

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Index Funds

• A relative new player (Rogers fund was founded in
  1998)
• Generally long only
• Subject to hedge exemption
• Can be looked at as a passive investment.

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Index Fund Weighting

• Crude Oil 21.00
• IPE Brent14.00
• Wheat 7.00
• Aluminum 4.00
• Copper 4.00
• Corn 4.75
• Heating Oil 1.80

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Energy Fuels 54.58 Industrial Metals 12.03 Precious Metals 4.67 Grains, Softs 22.16 Meats 6.56
Crude 29.78 Aluminum 3.80 Gold 4.19 Wheat 5.02
Brent 10.77 Copper 5.23 Silver .49
RBOB (Unleaded) 3.87 Lead 0.69
Heating Oil 3.54 Nickel 1.82
Gasoil 2.56 Zinc 1.36
Natural Gas 2.00



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Effects

• Increase in Volume and Open Interest
• Increase in Volatility
• Record Prices in Many Commodities

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Convergence

• Convergence, or the lack there of as been making
  a lot headlines.
• Convergence is the general meeting of futures
  prices and cash prices at expiration.

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Regulatory Risk

• CFTC and exchange
• New provisions
• Position limits
• Time frame

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Conclusions

• Fund participation most likely will not go away,
  if money is seeking the commodity markets it will
  find another vehicle or approach.

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Further Questions?

• Contact Sterling Smith at
• 800-328-6530 or ssmith_at_countryhedging.com

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Right Decisions for the Right Reasons