2023 Vista Beats - Commodity Index Performance Lags

Commodities failed to impress in 2023. At the same time, the Vista Commodity Basket beat the Bloomberg and GSCI excess return indexes by double digits.

Normalized commodity index returns where 1000 = 12/31/2022.

VISTA = Vista Commodity Basket

GSCI ER = S&P GSCI Excess Return Commodity Index

BCOM = Bloomberg Excess Return Commodity Index

Source: barchart.com

Rolling Compound Annual Growth Rates as of 12/31/2023

Vista Commodity Basket inception date = 4/30/2009

While the Vista basket of long term commodity futures contracts posted a nominal 2% gain, the diversified BCOM ER and energy weighted GSCI ER both sufferred losses in 2023. The headline indexes' reliance on rolling contracts may be the source of the performance disparity. Vista's long dated, true price discovery futures contracts dampened front month losses and actually eeked out a gain for the year. Over long terms, the Vista basket has doubled or tripled the gains of the headline indexes. 

Normalized performance where 1000 = 4/30/2009

In 2023 energy took the hit with WTI crude oil falling from $90 to below $70 a barrel, and the unleaded gasoline contract declining from above $2.50 a gallon to under $2! Ags and metals stayed roughly the same.  

Outlook

The epidemic and war induced commodity rally may be past best days. As the supply chain effects from epidemic fade, wars (in Ukraine and the Middle East) become the remaining catalysts, if any, for further commodity increases. Otherwise, I expect the long term forces of ageing population deflation will draw down commodity markets. 

Why excess return indexes? The Vista basket is a pure commodity futures basket with no adds from collateral interest. ER indexes reflect the same. Total Return (TR) indexes include interest gained on implied futures collateral.