Experts on commodity markets touted divergent investment strategies in a panel discussion at the Morningstar Investment Conference in Chicago on June 9. The panelists largely agreed, however, on the underlying economics of tight supply and growing demand across a range of commodities.
The panelists were Bob Greer of PIMCO, MacKenzie Davis of RS Investments, and Geoff Jay of Janus. The discussion, held in a room packed to capacity with hundreds of attendees, was moderated by John Rekenthaler of Morningstar.
PIMCO’s Greer touted using commodity futures for diversification, emphasizing that historically they have provided “negative correlations in many cases from stocks and bonds” along with “greater inflation protection.”
Davis, however, countered that “correlations have risen” and “the negative correlation of equities and commodities has not held up in recent years.” The RS Investments fund manager argued that “futures work well to protect you against supply shocks,” but “increasingly commodities are driven by changes in demand.” His strategy focuses on investing in the stocks of natural resources companies.
Jay, an energy equity research analyst at Janus, emphasized his firm’s approach of “bottom up stock picking,” or focusing on the merits of individual companies.