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Commodities play a crucial role in both the global economy and in constructing a well-diversified portfolio. Commodity markets are generally large and liquid, and have grown substantially in recent decades. Commodities can play an important role in a portfolio by offering diversification and growth potential.
Commodity strategies offer access to very large markets that have grown significantly in recent decades. Historically, commodities have provided a potential hedge against inflation, and have been used as an investment to help participate in the global economy. As these markets fluctuate, a diversified commodities portfolio with the ability to go long or short can provide the potential for profits in both rising and falling commodity markets.
Long/short commodity strategies have historically provided strong returns, and their performance has generally not moved in tandem with stocks or bonds. Adding investments such as long/short commodities, with a low correlation to other asset classes, provides the potential to reduce risk and improve returns in traditional investment portfolios.
| Long/Short Commodities | U.S. Stocks | Bonds | |
|---|---|---|---|
| Long/Short Commodities | 1.00 | ||
| U.S. Stocks | 0.24 | 1.00 | |
| Bonds | -0.01 | 0.19 | 1.00 |
Source: LoCorr Fund Management.
Past Performance is not a guarantee of future results. The referenced indices are shown for general market comparisons and are not meant to represent the Fund. Long/Short Commodities represented by HFRI Macro Commodity Index. U.S. Stock represented by S&P 500. Bonds represented by Bloomberg US Agg Bond.
While commodities can be an important asset class in a well-diversified portfolio, historically, the majority of commodity investments have been long-only. Long-only commodity investments can be highly volatile and subject to significant drawdowns when prices decline, as seen in the graph below. Adding long/short commodities to a portfolio provides the potential to generate higher returns, lower risk, and achieve better capital preservation than long-only commodities.
Growth of a Hypothetical $1,000 investment on January 1, 2008, through December 31, 2022
| Average Annual Return | Volatility | Max Drawdown | |
|---|---|---|---|
| Long/Short Commodities | 4.27% | 5.73% | -12.96% |
| Long-Only Commodities | -4.93% | 24.02% | -87.22% |
Source:LoCorr Fund Management.
Past Performance is not a guarantee of future results. The referenced indices are shown for general market comparisons and are not meant to represent the Fund. Long/Short Commodities represented by HFRI Macro Commodity Index; Long-Only commodities represented by S&P GSCI Commodity Index. Fund performance may be obtained by calling 1.855.LCFUNDS (1.855.523.8637). The growth of $1,000 chart reflects a hypothetical $1,000 investment in the index noted. Index performance is not illustrative of fund performance. One cannot directly invest in an index.
| 1 Year | 5 Years | 10 Years | |
|---|---|---|---|
| HFRI Macro Commodity Index | 14.95% | 9.05% | 4.48% |
| S&P 500 Index | -18.11% | 9.42% | 12.56% |
| BBg U.S. Aggregate Bond Index | -13.01% | 0.02% | 1.06% |
| S&P GSCI Commodity Index | 25.99% | 6.46% | -3.30% |
Click here for important disclosure and definition information.
Diversification does not assure a profit nor protect against loss in a declining market.
Mutual fund investing involves risk. Principal loss is possible. The Fund’s investment objectives, risks, charges and expenses must be considered carefully before investing. The prospectus contains this and other important information about the investment company, and it may be obtained by clicking here or a free-hard copy is available by calling 1.855.LCFUNDS. Read it carefully before investing. The Funds are offered only to United States residents, and information on this site is intended only for such persons. Nothing on this website should be considered a solicitation to buy or an offer to sell shares of the Funds in any jurisdiction where the offer or solicitation would be unlawful under the securities laws of such jurisdiction. The LoCorr Funds are distributed by Quasar Distributors, LLC.
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