Gold Mine or Fragile Bull Market?

At the end of the quarter, industrial metals also showed renewed momentum. In particular, prices for the base metals copper and aluminum rose sharply. In addition to rising demand and an open arbitrage window between the LME and the SHFE, aluminum production restrictions in China and the seasonal lack of stockpiling in Europe provided a tailwind. Copper prices benefited from production outages at Chinese refineries and significant buying by financial investors. Nickel, on the other hand, suffered from Indonesia's announcement that it would expand its nickel ore production capacity.

Precious metals posted the strongest gains in March. Both silver and gold benefited from weaker leading US economic indicators (ISM) combined with an inflation trend that is increasingly proving to be more persistent than expected. New all-time highs in gold prices prompted CTA funds in particular to make substantial purchases of gold. However, the fact that investor exposure remains below average raises the prospect of a continuation of the upward trend.

In contrast to previous months, the agricultural complex showed strength across the board in March. Grains signaled a rebound from the extended correction in the face of declining corn planting plans in the United States and concerns about the upcoming soybean harvest in South America amid a prolonged drought. Soft commodities outperformed again, led by a sharp rise in raw sugar prices due to the drought in Brazil.

Picard Angst All Commodity Tracker outperforms benchmark

The broad commodity benchmarks all posted strong gains in March. The Bloomberg Commodity TR Index returned +3.31%. Relative strength in energy and metals helped the S&P GSCI Commodity TR Index gain +4.73%. Our in-house PACI strategy's focus on the base metals leaders copper and aluminum, high exposure to precious metals and strategic avoidance of natural gas resulted in a monthly return of +4.66%, again outperforming the Bloomberg benchmark for the year. The Picard Angst All Commodity Tracker Plus fund generated a return of +4.92% (share class D in USD), with the adaptive roll and contract selection overlay adding to returns compared to the base strategy.

Picard Angst Energy & Metals Fund outperforms benchmark

Strategies excluding agricultural commodities performed similarly to the broad benchmarks in March. The Bloomberg Commodity ex-Ag ex-LS TR Index benchmark rose by +4.07%. Our Picard Angst Energy & Metals strategy outperformed its benchmark with a return of +4.68%. The outperformance since the beginning of the year is thus close to 3%, thanks in particular to the strong exposure to aluminum and copper among the base metals, the high weighting of precious metals and the strategic exclusion of US natural gas. The Picard Angst Energy & Metals fund slightly outperformed its base strategy in March with a return of +4.70% (share class D in USD), as the adaptive roll and contract selection overlay made a small positive contribution to performance.