IDX Commodity Opportunities Strategy

Bringing Opportunistic Commodity-focused exposure to Institutional Investors

A Commodities & Risk-Management Pedigree

At IDX we are focused on developing Risk-Managed Solutions that make it simple for fiduciaries and investors to participate in commodities beyond what’s available through traditional managed futures or long-only commodities funds.
IDX combines expertise across the managed futures and ETF landscape to deliver institutional investors risk-managed exposure that is focused on commodities with an ability to go short as well as opportunistically participate across asset classes.

Download our 2024 Commodity Outlook

Separate Accounts

Strategies are currently offered as model portfolios via separately managed account at either SMArtx Advisory Solutions or Amplify.  Please contact them for more information about how to set up an account.

Mutual Fund

For more information about the IDX Commodity Mutual Fund please click below to be redirected to the mutual fund site.

Why it does make sense to
own the Commodities Opportunity Strategy?

The IDX Commodity Opportunities Strategy seeks to tactically allocate to futures and ETFs, using a rules-based approach, in an effort to capture trends across asset classes (with a focus on commodities).

The IDX Commodity Opportunities Strategy seeks to deliver a superior risk/return profile relative to long-only (passive) commodity exposure.

Unlike managed futures funds, the IDX Commodity Opportunities strategy can utilize ETFs to participate capture trends across a broader ecosystem of exposure (i.e. Miners, Oil Services) as well as entire industries not captured by the futures markets (i.e. CleanTech, AgTech)

More Than Just Managed Futures

The strategy's manager, IDX, believes that the commodities will be an important source of return for investors going forward.

However, traditional managed futures funds are typically:

Not necessarily focused on commodities exposures and

Only express allocations through futures contracts. 

IDX believes a crucial part of the commodity investing landscape, going forward, will be expressed in commodities-related companies…as well as the commodities themselves.

Our models seek to profit from bullish & bearish trends across asset classes with a dedicated focus on commodities.

In addition to futures contracts, the strategy seeks to profit from trends within the ETF landscape as well (e.g. mining companies, oil servicers, agri-business, etc.)

The Importance of a Long/Short Approach

“Commodities” is not a single asset class

Most investors think of Commodities as a single long-only allocation to a fund.  In most cases, commodities funds are weighted by open interest and therefore heavily skewed towards a long energy exposure.

The reality, however, is that the commodities markets are very different and reflect nuanced and, often opposing, outlooks.  Precious metals, for example, may respond strongly to geo-political risks and interest rate movements, while Grains are moving in a completely opposite direction based on drought forecasts.

We believe that investors that are serious about commodities exposures in their portfolios should consider a long/short approach.  The global commodities markets represent a diverse and multi-faceted ecosystem that have different drivers of returns that can move very differently based on market conditions.  We believe investors’ approach should reflect this reality.

Correlation is a measurement between -1 and 1, which indicates the linear relationship between two variables. If there is no relationship between two variables, the correlation coefficient is 0. If there is a perfect relationship, the correlation is 1. And if there is a perfect inverse relationship, the correlation is -1.

What IDX Believes In

Volatility Can Be Favorable, But Not Without Downside Protection

Commodities have long been an important source of return within institutional portfolios. Over the last decade, generationally low interest rates and inflation combined with quantitative easing have caused investors to chase increasingly speculative or growth-oriented investments. The issue remains that commodities have always been a volatile asset class. IDX seeks to harvest that volatility as a source of return for investors by tactically establishing both long and short exposures that seek to take advantage of trends across all environments.

Long/Short Access to Commodities is Important

We began managing commodities exposure in the form of Separately Managed Accounts in 2019 with a dedicated focus on Risk-Mitigation. Commodities are a powerful asset class for investors, particularly during periods of non-zero inflation and increased geo-political risks.  That said, the volatility and large drawdowns of the asset class are a stumbling block for many investors.  By taking an opportunistic long/short approach to commodities, IDX seeks to provide investors with a commodity-focused exposure that can make money in any environment.

An Ability to invest across Futures & ETFs

Futures contracts have largely remained unchanged since the 70’s while all of the innovation in providing exposures has been in the ETF landscape.  By moving outside just futures contracts, the IDX Commodity Opportunities strategy can participate in trends within the commodities ecosystem that extend beyond just the raw material (such as Oil Services or Miners) as well as entirely new parts of the ecosystem that have no futures representation at all (such as “CleanTech” or “AgriBusiness”).

FAQs

The strategies are currently available as separate accounts offered through SMArtX advisory as well as Amplify.  For information about the IDX Commodity Mutual Fund visit the fund page here.

The model account strategies do not utilize any ETFs that distribute a K1.  For information about the mutual fund click here.

Because the strategy is designed to be opportunistic, it has the ability to transact across instruments including futures & ETFs.

Unlike most managed futures funds, the IDX Commodity Opportunity Strategy expects to have the majority of the fund invested in commodities or commodities-related investments the majority of the time.  Because there can be periods in which few opportunities exist in within the commodity spectrum (either long or short), the strategy has the ability to try and capitalize on trends in other asset classes.

Yes! This is one of the distinguishing features of our strategy – the ability to invest in various commodity and hard asset related ETFs.  This allows for (i) the potential to capitalize on more sophisticated trends within the commodities complex (e.g. short oil vs. long oil producers) as well as (ii) the ability to capitalize on industries that aren’t touched by futures (e.g. agri-business, clean-tech, green-tech, infrastructure, etc.)