RAFI Strategies

RAFI Commodities

Dow Jones RAFI Commodities seeks to deliver inflation protection, portfolio diversification, and excess returns in a low-cost smart beta strategy.

At a Glance


 

Provides inflation protection and diversification

Emphasizes systematic sources of return

Lowers costs and increases transparency

DJ RAFI™ Commodities is a smart beta strategy for commodity investing.

Existing commodity strategies do not fully meet investors' needs. Traditional passive strategies can have naive construction rules that result in poorly diversified portfolios and negative roll returns. Actively managed commodity solutions are typically opaque and have high fees, but RAFI commodities seeks to deliver inflation protection, portfolio diversification, and excess returns in a low-cost smart beta strategy.

Thoughtfully designed to deliver for investors

Offers inflation protection and diversification
RAFI Commodities takes a diversified approach across energy, metals (industrial and precious), agriculture, and livestock—essential components of the consumption basket that exhibit low correlations with most asset classes. During inflationary regimes, these have historically outperformed traditional stocks and bonds.

Emphasizes systematic sources of return
The strategy seeks to capture systematic sources of return by allocating to commodities with positive roll yield and momentum—primary drivers of excess returns in commodity investing. By broadening the opportunity set and dynamically selecting from liquid, longer-maturity contracts, the strategy seeks to avoid unnecessary turnover and lower overall portfolio volatility.

Lowers costs and increases transparency.
The methodology is fully transparent and rules based, lowering due diligence and monitoring costs.


 

Methodology

Methodology-RAFI_Commodity



 

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