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. Additional inputs feed our investment process, including the macro environment, the potential influence of event risk on commodity prices, and on- the- ground due diligence field trips.
This last component, field analysis, is one of the factors that distinguishes the Cohen & Steers Active Commodities strategy and, in our view, helps us gain an edge in decision making. These trips provide our team with insights into many aspects of the commodity lifecycle—from extraction of the raw material, to production and processing, and finally to the end product. By understanding the supply-chain process, we learn about the many variables that can influence commodity futures price activity. Over the years, we have cultivated relationships with farmers, ranchers, agronomists, and other sector specialists in commodities, whom we engage with regularly. Importantly, we do not conduct field analysis with the intent of making a specific trade, as its primary purpose is educational. However, for example, in the case of extreme weather events such as drought or flooding, we may visit a location and meet with field experts directly impacted to learn first-hand about the issues that have the potential to move prices.
The content above is a summary of the full report.
To continue reading, click here.
The views and opinions in the preceding commentary are as of the date of publication and are subject to change without notice. This material represents an assessment of the market environment at a specific point in time, should not be relied upon as investment advice, is not intended to predict or depict performance of any investment and does not constitute a recommendation or an offer for a particular security. We consider the information in this document to be accurate, but we do not represent that it is complete or should be relied upon as the sole source of suitability for investment. Investors should consult their own advisors with respect to their individual circumstances.
Please consider the investment objectives, risks, charges and expenses of any Cohen & Steers fund carefully before investing. A summary prospectus and prospectus containing this and other information may be obtained by visiting cohenandsteers.com or by calling 800 330 7348. Please read the summary prospectus and prospectus carefully before investing.
Risks. An investment in commodity-linked derivative instruments may be subject to greater volatility than investments in traditional securities, particularly if the instruments involve leverage. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates, or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. The use of derivatives presents risks different from, and possibly greater than, the risks associated with investing directly in traditional securities. Among the risks presented are market risk, credit risk, counterparty risk, leverage risk and liquidity risk. The use of derivatives can lead to losses because of adverse movements in the price or value of the underlying asset, index or rate, which may be magnified by certain features of the derivatives.
Futures Trading Is Volatile, Highly Leveraged and May Be Illiquid. Investments in commodity futures contracts and options on commodity futures contracts have a high degree of price variability and are subject to rapid and substantial price changes. Such investments could incur significant losses. There can be no assurance that the options strategy will be successful. The use of options on commodity futures contracts is to enhance risk-adjusted total returns. The use of options, however, may not provide any, or only partial, protection for market declines. The return performance of the commodity futures contracts may not parallel the performance of the commodities or indexes that serve as the basis for the options it buys or sells; this basis risk may reduce overall returns. This commentary must be accompanied by the most recent Cohen & Steers Fund fact sheet(s) and summary prospectus if used in connection with the sale of mutual fund shares.
This is not an inducement to buy or sell commodity interests. Trading in commodity interests involves a risk of loss. Past results are not indicative of future results. Investors should consider whether commodity interests are suitable investments.
Cohen & Steers Capital Management, Inc. (Cohen & Steers) is a registered investment advisory firm that provides investment management services to corporate retirement, public and union retirement plans, endowments, foundations and mutual funds.