As signaled in September, the Organization of the Petroleum Exporting Countries (OPEC) convened in November to establish a production target to help stabilize the global oil market.
After hitting a 14-year low in January, commodity prices are staging a revival as producers scale back supply, slowly bringing the market back into balance. Our analysis indicates that the recovery path remains on track, and we expect supply and demand to be largely rebalanced by the end of 2017.
As an active commodities manager, the strength of our expertise rests in the depth and rigor of our fundamental investment process. The team conducts bottom-up analysis focusing on supply and demand balances, inventory trends, valuation, market participant composition, technical data and structural curve analysis.
The U.K.'s historic decision to leave the European Union (EU) has sparked fears about the economic impact on the region and the world. We discuss the investment implications for select Cohen & Steers asset classes, including global real estate securities, global listed infrastructure, commodities and preferred securities.
After an eight-year, 69% decline in the Bloomberg Commodity Total Return Index, we see growing signs that the market is beginning to resolve its oversupply situation, sowing the seeds of a sustainable recovery.
Despite continued volatility, we believe the oil market is already seeing corrective actions needed for a price recovery.
Agricultural commodities remain mired in low prices after years of ideal growing conditions and expanded acreage. But with shifting weather likely to disrupt global production in 2016, we believe a rebound in prices is on the horizon.
Despite trading near seven-year lows, we expect copper prices to head even lower in the short term. But with copper prices this low, few producers are looking for new supply sources, setting up a potentially massive shortage toward the end of the decade.
Over the past decade, investors have allocated to commodities to enhance portfolio diversification, hedge against unexpected inflation or event risk and participate in the secular bull market for basic materials. We make the case for an actively managed approach grounded in fundamental research.
The views and opinions in the preceding commentary are as of the date of publication and are subject to change. This material should not be relied upon as investment advice, does not constitute a recommendation to buy or sell a security or other investment and is not intended to predict or depict performance of any investment.
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Cohen & Steers open-end funds are distributed by Cohen & Steers Securities, LLC