Editor's Note

Commodities Beta And Then Some
By Jim Wiandt

It's probably safe to say that most of you understand at least the fundamentals of commodities investing. You likely know the basics of how the two most popular commodities indexes—the S&P GSCI and the DJ-UBS Commodity Index—work, and you likely even think commodities have a legitimate place in investor portfolios. However, in this issue we're kicking it up a notch, digging a little deeper—maybe even pushing the envelope. Think of it as "Commodities 201."

Geetesh Bhardwaj and Adam Dunsby of SummerHaven Investment Management lead the issue by pointing out that different sectors respond to certain market environments in different ways—something that investors should take into account when making their commodities allocations. David Krein and John Prestbo of Dow Jones Indexes continue in the same vein, with a meditation on the changing nature of commodities performance relative to other asset classes and what that means for investors.

S&P's David Blitzer is up next, noting—from an indexer's point of view—how commodities as an asset class are similar to, and different from, equities and fixed income. Then Sal Gilbertie of Teucrium Trading discusses the diversification benefits of commodities, and how certain individual commodities exhibit exceptionally low correlations.

Next up, the staff of Journal of Indexes sat down for a chat with some of the leading figures in the commodities space, touching on some of investors' most pressing questions. Commodities indexing rock stars Jim Rogers, Victor Sperandeo and Shonda Warner, among others, all share provocative comments on the space for our readers. Jonathan Guyer of Longview Funds Management follows, offering some ideas on the optimal way to construct a commodities index.

John Mulvey of Princeton University continues the diversification discussion begun earlier in the issue by Gilbertie, exploring how the strategic addition of managed futures— specifically, commodities futures—can enhance the returns of an equities portfolio. Morningstar's Paul Kaplan then frames an argument for the superiority of a momentumbased long/short commodities strategy over a plain-vanilla, long-only approach.

Finally, Bruce Greig is back with another crossword puzzle, this one built around— you guessed it!—commodities. Now, layer on some sunscreen, kick back into your beach chair and enjoy some top-quality summer reading.

Jim Wiandt
Editor