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Accept No Substitutes—Parametric Portfolio Associates

Oct 18, 2019 / Commodities, Asset Class Research Research Alliance

More and more investors are considering an allocation to commodities, typically motivated by a desire to tap the inflation-fighting and diversifying properties of this asset class. While the most natural way to get commodity exposure is by investing in a portfolio of commodity futures, many investors (and consultants) believe owning a portfolio of natural resource stocks is an easier method.

Yet as this paper shows, the intuitively appealing substitution of natural resource stocks for a futures-based commodity exposure offers a less effective solution for both inflation protection and diversification.

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