The funny thing is that the stock market often rises early in the cycle in anticipation of bigger earnings, all at a time that commodity prices slumber. Later on, when earnings look to have capped out, the stock market stalls. Raw materials, meanwhile, are only starting to get pricier. Not only that but the GSCI has an impressive record longer term. Right now, the fund's managers are bullish on commodities.
Demand is strong for commodities, and there's a physical constraint on supply, particularly for oil.
Even with OPEC now mulling over production hikes to ease global oil pricing, it looks as if commodity markets have the stamina to reward investors a healthy amount over the next year. And our projection could well be skewed upwards if oil supplies are tapped and energy prices spike upward. Real Asset can thank the weighting of the GSCI for its sparkling results the last 18 months. In order to reflect the size of various commodity markets, the index is predominately stationed in fuels, with energy positions accounting for almost two-thirds of its makeup. The two managers can thank some other markets also.