Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Potential New Approaches To Retail Commodity Investment Products.

In the world of investments there are obviously certain "musical chair" type situations. Hedge funds, that can only be invested in via certain funds of funds or friends, commodity pools that require certain antes per se to get into. Back in my intern days I remember the refrain concerning the difficulties getting into certain "syndicate"(legal) related opportunities even when investing under the guise of one's own parent company per se; either way, as we all know there are no perfect markets, and perfect access per se. etc.

____________________________________________________________

This can make an interesting opportunity/situation for retail investors attempting to invest in commodities specifically. Since the vast majority of public equity is owned by passive indexing investors, there is almost a certain unspoken or perhaps shadow beta that connects all publicly traded equity investments. Hence the pure commodity opportunities to retail investors(average) will most often always have a certain inclusion of market risk to them. In addition to this there is perhaps a more limited choice of options available. Since commodities pool investments are often very manager/approach specific, this can be somewhat taxing in so far as the due diligence required to make a sound investment.

___________________________________________________________

One may contrast this to the relative simplicity and high yield associated with indirectly getting into more middle market transactions. With the average private equity deal having a yield range up to around 25%, its not surprising that even after a cut has been made per se to those managing the capital, that one investing indirectly in mid-market-financing companies can still make a healthy yield.

__________________________________________________________

Commodities themselves are a tricky investment, and perhaps the various costs to entry etc, make it somewhat of a more difficult play for one's average retail investor. The infrastructure needed to heavily invest in commodities could also be somewhat funny to expect of the average retail investor, and the knowledge of specific market conditions/technical/black-box/other approaches to trading may be too time consuming or unknown to the majority of retail investors(a knowledge of options/options patterns may also not necessarily be in the average retail investor's quiver of investment expertise).

___________________________________________________________

Hence I wonder if with all these things taken into account, if there isn't some way to make an ideal closed-pseudo-REIT-like commodity fund. Something like a closed mutual fund, and pooled like a REIT, perhaps even a pool of commodity funds; for surely there would be enough managers to find to fill up and diversify away manager risk per se.

___________________________________________________________

Either way, perhaps given the somewhat-not-so-stellar performance of some more common retail commodity investments as of late, it might be interesting to see the demand for a product like that described above, for surely if it were explained well, the average retail investor, would appreciate the diversification benefits associated with investing in a commodity pool(s).

__________________________________________________________

It might need to be emphatically harked upon, that one's managers/approaches are sound, since unfortunately some studies have shown s&p like or sub, performance for commodity investment indices, however, there's always trend breakers in every "space", and perhaps this could be emphasized.

____________________________________________________________

Either way, perhaps there is an opening within the market for a more complexly-constructed yet at the same time simple to disperse commodity type investment, that could be of use the to the average retail investor.