The hot run on commodities funds--particularly those focused on gas and oil--seems to have begun cooling, according to The Wall Street Journal.
Natural gas and oil funds, collectively, have dropped 6.7% in the past month alone,
"The mega-run for commodities has run its course," said Stephen Roach, chief economist for
That could be bad news for millions of investors who plowed their retirement and other money into what they thought were can't-lose funds in recent months. Many missed the run-up altogether.
Yet investors continue to pour money in. The $12.18 billion
Commodities, in general, are volatile, but natural resources are particularly subject to swings in response to the geopolitical and other external forces.
Although the funds are losing ground now, they are sure to see an upswing eventually, but that is little comfort to investors who have misguidedly plowed all their investment eggs into commodities baskets.
Some, though, believe the recent dip is little more than a blip.
"We've not seen fundamental change in the supply and demand," said Robert Shearer, manager of the
If the economy suffers a recession, these funds are likely to tumble more, said Brynjolfsson. But if inflation sets in, they could prove as good as gold to investors.
"Hopefully, all commodity investors are investing with a long-term view," he said.
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.
