Commodity plus fixed income portfolio
The DFA Commodity Strategy Portfolio – Institutional Class (DCMSX) is an alternative mutual fund that uses a commodity hedge fund return strategy. The fund primarily manages a portfolio of various derivative instruments such as futures, forwards, and swap contracts. The fund simultaneously manages a fixed income portfolio as collateral against its derivative commodity exposure and to generate revenue.
The graph above compares the net asset value of DCMSX with that of two other commodity strategy alternative funds, the Fidelity Series Commodity Strategy (FCSSX) and the PIMCO Commodities Plus Strategy Fund – Class A (PCLAX), since January 1, 2012. Due to depression in the commodity market and the US equity markets (VFINX) as a whole, all three funds have fallen considerably. The best performer among the three is DCMSX, which has managed to limit its losses more than the other two funds. The worst performer is PCLAX, which has fallen the most.
The average dividend yield of DCMSX is 2.5% higher than the average dividend yields of FCSSX and PCLAX, which are both 2.4%. Some of the top holdings of the fund include fixed income unsecured bonds issued in the US for companies such as the ExxonMobil (XOM), Qualcomm (QCOM), American Express (AXP), and Philip Morris International (PM). The investment methodology of DCMSX is outlined in the next part.