We have a Mighty Commodity Equity Strategy now
Commodity Report #250
*YTD our absolute return strategy is up +6.9%
Find our 2025 performance here (+20% total return and 2.99 Sharpe)
We have a Mighty Commodity Equity Strategy now
Today I don’t want to talk about commodity markets - today I want to present you a new strategy we designed over the past years.
Our goal was always to find a way to translate our commodity/macro expertise also to commodity equities - and as you may know this can be quite tough. But what if I tell you there is an equity staretgy that translates our framework to equities:
has no signifacant correlation to the broad equity market
outperforms every single commodity equity benchmark
has much lower volatility and drawdowns then every strategy peer
This is a backtest of the entire strategy from Feb 2016 till end of April 2026. YTD our strategy is up 11%.
Perhaps sounds to good to be true - but here is how it works:
Commodity Equities sit half cyclical, half macro — owned by neither growth investors nor pure commodity funds.
The result is persistent mispricing between the underlying commodity and the producer stock. The strategy systematically isolates those moments of dislocation. If you understand that you might be able to pull off such a strategy yourself.
Our Futures Framework…Applied to Commodity Equities
We know which factors from the macro/commodity front matter for which equity sub sectors
Identify which sub sectors we should have the highest exposure
Select the highest quality stocks from these segments
We do not simply use “one macro factor for everything” — instead, each of the 10 subsectors has its own dedicated mapping.
Rather than trying to apply traditional equity factors to commodity equities, we translate commodity-specific drivers into the producer stocks.
Outperforming every other active manager
Here is for example the Citywire-database that accounts for all active commodity equity strategies. Over the past 10 years our straetgy would have outperformed all of them. You can look it up for yourself here.
With our total return over 10 years we would have generated a total return of 1,254% with a max drawdown of 16% (montly basis). Better than every peer strategy, every peer index, not only in total returns but also in drawdown terms!
Commodity equities remains an overlooked end of the market - there is alpha to generate…
Institutional Services
If you’re an institutional investor that wants to commit money into our strategy, receive a portfolio-overlay or copy our strategy to participate directly from our framework - contact us via info@lukas-kuemmerle.com
Till next Monday, Lukas
If you have any questions in the meantime, please feel free to contact me via X or Mail.