UBS Gives Actively Managed Funds A Plug

UBS Wealth Management is advising investors in commodities to consider putting their money in actively managed funds instead of indices, since the former can take better advantage of market movements.

UBS Wealth Management is advising investors in commodities to consider putting their money in actively managed funds instead of indices, since the former can take better advantage of market movements. Acknowledging that the bulk of the $200 billion commodities market is in passive indices, such as the Goldman Sachs Commodities Index, UBS says active funds are a better bet. “Given the high cyclicality and the expected changes in commodity markets in the future,” the company stated in a report, “investors may want to engage in a more active selection of commodities and not invest passively.” By choosing active funds, says the Swiss bank, investors could avoid movements that can destroy value, such as “negative roll yield,” which occurs when a security is priced higher in the future than its current price. UBS recommended stocking up on natural resources, which it says have a great future, given the demand, especially in emerging markets.