Vista continues its rise and outperformance through the third quarter.
Normalized monthly performance since Vista inception, 4/30/2009 = 1000
Vista = Vista Commodity Basket
BCOM ER = Bloomberg Commodity Excess Return Index
GSCI ER = S&P GSCI Commodity Excess Return Index
Sources of closing prices: barchart.com, bloomberg.com,spglobal.com
Continuously compounded returns for rolling perionds as of 9/30/2024.
For almost ANY period and not just the ones shown above, the long-dated, diversified Vista basket has outperformed both the diversified frequently rolled Bloomberg index and the energy weighted frequently rolled GSCI index. Vista is helped by the rise in precious metals. The GSCI has been weighted down by the decline in energy futures whereas Bloomberg is also seeing the effects of a general revaluation of ags, energies and commodities in general. YES, inflaition IS coming down.
WHY "Excess Return" indexes? Because excess return indexes do not incude any collateral interest and neither does the Vista basket. Vista makes no assumptions about how you finance your commodity positions, Vista assumes that your commodity account is fully collateralized with cash. The Vista basket only includes commodity futures contract returns. Thus, the excess return indexes are comparable measures.**
Why does Vista beat the major commodity indexes? Three reasons: Vista includes the right names, the right months and the right rolls.
Right names-The Vista basket only includes major price discovery commodities. While commercial accounts can affect market prices, all participants are price takers in Vista names. Even Saudis cannot control oil prices. Markets where participants have price power are not free markets and are avoided by Vista. This selection is a proprietary art of Vista.
Right months-trading is the friction/the enemy of market returns. Too much trading, including frequent rolls, reduce investor returns. But futures have expiration dates so rolls are a necessary evil. Vista carries the longest dated months with suitable liquidity. This is a proprietary art of Vista.
Right rolls: when to roll and when to hold long-dated futures contracts is another determinant of investor return and another proprietary art of Vista.
All of the above above plus holding only well-formed markets and other minor factors all contribute to Vista's significant 300 to 2000 basis point outperformance versus the headline commodity indexes.
What is the Vista Commodity Basket? The Vista Basket is a futures account that buys and holds 15 commodity futures contracts. As of September 30, 2024 the Vista Basket is composed of the following:
Note that the Vista Commodity Basket, when held by investors, was valued at $1.22MM on 12/30/24. Since this account is fully colleteralized, i.e. margined at 100%, the full $1.22 MM is posted on the account. Actual quantity and contract size is proprietary and an art of Vista.
**Note that fully collateralized/100% collateral positions will never have margin calls (assuming prices do not go negative). Further, since the excess returns and the Vista basket ARE fully collateralized, the investor return will always be higher than the excess return since cash WILL be invested in TBills. Ine key feature of excess returns is the lack of forced liquidations due to margin calls.
