There are more than 1,500 attendees at ETF.com's InsideETFs conference, most of them advisors, so it's a pretty crowded place.
But Credit Suisse commodities director Oscar Bleetstein pointed out the elephant in the room — or rather absent from the room hosting a session on commodities — by noting all the empty seats. (In contrast, the preceding session on emerging markets was standing room only.)
Commodities, nearly all of them, had a disastrous year in 2013.
The panel moderator, ETF.com's Drew Voros, opened the session with a graph showing the performance of stocks (represented by SPY) and gold (represented by GLD). The two steep diagonals, one climbing up, the other plummeting downward, looked "like Jaws," Voros said.
But for those focused on performance, Bleetstein offered an arresting detail: If you look at year-to-date performance of stocks and commodities (gold particularly) for 2014, you still see diagonals, but they look very different this time. Annualizing that performance would imply a 37% loss for stocks and 15% gain for commodities.
The message that Bleetstein and other panelists took is that commodities play a role in a portfolio and should not be shunned because of a bad year.
"Commodities did what they were supposed to. They reduced the volatility of a portfolio but at a significant cost in 2013," is how David Cleary, a portfolio manager at Lazard Asset Management, put it. "But the intention is higher risk-adjusted return."
Or as Bleetstein said, looking forward: "We may have an inflation shock. Surprises are by definition things that are unanticipated."
And as Deutsche Bank's Martin Kremenstein echoed: "We've had basically no inflation for some time; commodities are a hedge against unexpected inflation."
The panel discussed a number of commodities-related topics, one of which was the need to be careful with the term "commodities."
Said David Krein, head of research for Nasdaq Global Indexes:
