NEW YORK ,
May 12, 2015
/PRNewswire/ -- Commodities were higher in
April, largely driven by fundamental factors within the Energy
Sector, according to Credit Suisse Asset Management.
The Bloomberg Commodity Index Total Return performance was
negative for the month, with 14 out of 22 Index constituents
trading higher.
Credit Suisse Asset Management observed the following:
- Energy was the best performing sector, up 13.84%, with all
constituents posting gains. Crude oil and petroleum products led
the sector higher amid reports of declining US production and
inventories, while demand continued to be strong.
- Industrial Metals increased 7.81%, led by Zinc. Positive new
home and construction data was reported out of China, increasing expectations for a recovery
in base metals demand.
- Livestock ended the period 1.73% higher, led by Lean Hogs.
Exports were up sharply for the year through April 23rd compared to the same period
last year.
- Precious Metals was the worst performing sector, down 0.84%.
Silver led the sector lower as investment demand continued to be
weak. While U.S. economic data was mixed, expectations were that it
was still good enough for the Federal Reserve to consider
tightening monetary policy sooner rather than later.
- Agriculture decreased 0.52%, led lower by Wheat. Forecasts of
continued rainfall in the U.S. Southern Plains alleviated
expectations of damaged crops caused by unfavorable dry weather
conditions earlier in the year, and increased yield
expectations.
Nelson Louie, Global Head of
Commodities for Credit Suisse Asset Management, said: "April was
generally a strong month for Commodities, with the main focus on
the Energy sector, as the sharp drop in rig counts and cutbacks in
capital expenditures may start to provide support to the market. In
addition, changes in Cabinet members in Saudi Arabia and geopolitical concerns in the
Middle East increased uncertainty
over the region's future oil production. In the US, as the summer
growing season approaches, weather forecasts will increasingly play
a bigger role in driving returns in the Agriculture sector. "
Christopher Burton, Senior
Portfolio Manager for the Credit Suisse Total Commodity Return
Strategy, added, "At a macroeconomic level, signs of manufacturing
activity in China were mixed, with
PMI data hovering between expansion and contraction. However, the
latest data exceeded expectations, suggesting government stimulus
efforts may be working. The latest European PMI data indicated
stronger levels of expansion, which may increase demand
expectations for base metals. Uncertainty remains high regarding
the impacts of divergent central bank policy, leading to increased
levels of volatility across multiple asset classes. These risks,
along with the elevated potential of inflation overshooting
expectations, highlight the importance of having a diversified
portfolio."
About the Credit Suisse Total Commodity Return
Strategy
Credit Suisse's Total Commodity Return Strategy has been managed
for over 28 years and seeks to outperform the return of a
commodities index, such as the Bloomberg Commodity Index Total
Return or the S&P GSCI Total Return Index, using both a
quantitative and qualitative commodity research process. Commodity
index total returns are achieved through:
- Spot Return: price return on specified commodity futures
contracts;
- Roll Yield: impact due to migration of futures positions from
near to far contracts; and
- Collateral Yield: return earned on collateral for the
futures.
As of April 30, 2015, the Team
managed approximately USD 11.0
billion in assets globally.
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This document was produced by and the opinions expressed are
those of Credit Suisse as of the date of writing and are subject to
change without obligation to update. It has been prepared solely
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Certain risks relating to investing in Commodities and
Commodity-Linked Investments:
Exposure to commodity markets
should only form a small part of a diversified portfolio.
Investment in commodity markets may not be suitable for all
investors. Commodity investments will be affected by changes in
overall market movements, commodity volatility, exchange-rate
movements, changes in interest rates, and factors affecting a
particular industry or commodity, such as drought, floods, weather,
livestock disease, embargoes, tariffs and international economic,
political and regulatory developments. Commodity markets are highly
volatile. The risk of loss in commodities and commodity-linked
investments can be substantial. There is generally a high degree of
leverage in commodity investing that can significantly magnify
losses. Gains or losses from speculative derivative positions may
be much greater than the derivative's original cost. An investment
in commodities is not a complete investment program and should
represent only a portion of an investor's portfolio management
strategy.
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