With the use of commodity futures as an investment vehicle coming under fire, as demonstrated in numerous stories in this issue of Futures, we decided to ask Jim Rogers what he thought of recent Congressional proposals to restrict investments in index funds, which would include money benchmarked to the Rogers International Commodity Index. Rogers, you may recall, predicted the current commodity bull market back in 1999 and enumerated his reasons in his book “Hot Commodities.”
Rogers was not happy with recent Congressional proposals to restrict pension money from investing in index funds. Rogers derisively referred to Sen. Joseph Lieberman (I-Conn.), who has supported restricting investments in index funds, as Sen. Smoot for the infamous tariff legislation that many economists believe contributed to the Great Depression. Rogers noted, “Senator Smoot has insisted pension plans [and] university endowments not be allowed to invest in commodities. Hope you do not have a pension plan or run a university during the next few years. Of course, senators have their own sweet deals for pensions so it would not affect them – only the public.”
That comment got us thinking. What would have been the effect on pension plans if investments in index funds had been restricted at the beginning of 2008. “Making a difference” shows the difference in a $10,000 investment with a 50/50 allocation to equities and bonds (as represented by the S&P 500 index and the Lehman Bros. Government Bond Index) and the same portfolio with a 20% allocation to the Goldman Sachs Commodity Index. The difference in the first six months of this year was nearly 10% or $1,000 on a $10,000 investment.
Hot new CTAs
Futures is looking for the best new CTAs to profile in our annual feature. If you will have managed customer funds for at least one year as of the end of August and have less than $20 million under management, mail your disclosure document and audited track record to Daniel P. Collins, Futures Magazine, 222 S. Riverside Plaza, Suite 620, Chicago, IL 60606. E-mail: dcollins@futuresmag.com . Deadline: Friday, August 22, 2008.