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Rick Ferri |
Larry Swedroe |
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"...commodities fail the expected real return test. That's why I don't include them in portfolios. The lower expected returns of commodity funds is not a fair trade for the proven real returns of assets such as stocks."
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"Futures, or more specifically CCFs, are one of those rare asset classes that have negative correlation to both stocks and bonds...With negative correlation we actually like higher volatility because, with rebalancing, the diversification return increases."
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Exclusively on HAI, Rick Ferri and Larry Swedroe go head-to-head with no holds barred in a debate not be missed.
Rick and Larry battle it out with their opposing views on using commodities in a well-diversified portfolio:
- How useful are commodities in a long-term asset allocation strategy?
- Is negative correlation alone reason enough for an allocation to commodities?
- Is there a beta for commodities? An alpha?
- How correlated are commodities benchmarks to one another?
Richard A. Ferri is the founder and CEO of Portfolio Solutions, LLC, a Michigan-based investment firm, and is an adjunct professor of finance at Walsh College. He has written five investment books: All About Index Funds; Protecting Your Wealth in Good Times and Bad; All About Asset Allocation; Serious Money: Straight Talk about Investing for Retirement; and The ETF Book: All You Need To Know About Exchange-Traded Funds.
Ferri earned a Bachelor of Science degree in Business Administration from the University of Rhode Island, a Master of Science degree in Finance from Walsh College, and holds the designation of Chartered Financial Analyst (CFA). Ferri worked as a stockbroker with two major Wall Street firms for ten years before starting his firm in 1999. Portfolio Solutions manages close to $700 million in separate accounts for high-net-worth individuals, families, non-profit organizations, and corporate pension plans. The firm specializes in a low-cost, tax-efficient, asset allocation investment approach to building wealth.
Larry Swedroe is a Principal and Director of Research for Buckingham Asset Management Inc., a Registered Investment Advisor in Missouri. He is also a Principal of BAM Advisor Services LLC, a service provider to CPA investment advisors across the country. Swedroe is the author of six books on personal investing including the bestseller, The Only Guide to a Winning Investment Strategy You'll Ever Need.
Previously, Larry was Vice-Chairman of Prudential Home Mortgage. He has held positions at Citicorp as Senior Vice-President and Regional Treasurer, responsible for treasury, foreign exchange and investment banking activities, including risk management strategies. He holds an MBA in Finance and Investment from NYU, and a bachelor's in Finance from Baruch College.
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