The moves in commodities such as aluminum, copper, and nickel, are “talking about the true global economy,” Jeffrey Sherman, DoubleLine Capital’s deputy CIO, tells Yahoo Finance in the video above.
“It’s amazing to see actually the coordinated growth. I keep using this phrase. But if you take what’s called the OECD, the developed world, and you combine that with the top ten emerging markets by GDP, they are all growing right now. We haven’t had this coordinated growth since ’04, ’05, and ’06. There’s usually someone that’s exhibiting some sort of recessionary behavior,” he said.
“There is a large build out, and there is this need for commodities, so we are actually in kind of this commodity boom, but it’s overshadowed by the S&P 500 (^GSPC) which sets highs every day,” Sherman says. “The market’s doing quite well. Again, it’s flat year to date, but in the last three or four months it’s had a very very strong performance.”
That said, investors have hated commodities for quite some time.
“A lot of investors came late to the commodity party where we had … what people refer to as a super cycle in commodities, essentially when China was consuming way above historical averages and really driving the price upward of commodities.”
Sherman manages the DoubleLine Strategic Commodity Fund (DBCMX) (DLCMX), which has outperformed the Bloomberg Commodities Index (^BCOM) since its inception. The fund is structured to combine a long-only approach with a long-short approach that uses quantitative signals to generate those positions.
Commodities provide portfolios with diversification benefits that investors can’t get from stocks or bonds, he said.
Listen to the full interview:
Julia La Roche is a finance reporter at Yahoo Finance. Follow her on Twitter.