Faheem Osman – Commodity QIS: An Under-Appreciated Source of Systematic Returns? (S7E29)

Bullish:

• $COMMODITIES - Commodities offer the highest risk-adjusted returns in QIS due to physical supply/demand dynamics that continuously replenish premiums, with structural flows from producers and consumers that cannot be arbitraged away.

  • “commodities have historically delivered the highest risk adjusted return of any asset class in QIS, higher than equities, rates, or FX”

    Corey·17:58

  • “commodity QIS works because the opportunity set is fundamentally different from equities, rates, and FX. And as I mentioned, like these commodities, they're typically driven by physical markets that are shaped by real world frictions”

    Faheem·18:19

  • “the same premia keeps getting replenished because producers and consumers have to continue to hedge in the same way”

    Faheem·19:34

  • “the underlying source of the return is continuously replenished because the behavior of these market participants is repeated and it becomes a pattern”

    Faheem·20:29