As of the 1st of June you’ll find new Ibbotson capital market assumption inputs and updated asset models in Adviser Workstation.
This year, in addition to the consolidated and standard asset models, we’ve added supplementary standard models that exclude the Commodities asset class. This is primarily for those advisers using the Morningstar Portfolio Selection (MPS) service. Commodities has always been a minimal allocation in the Portfolios and for the MPS service, it has been populated by funds which are invested in the securities of commodity-related companies rather than physical commodities. These indirect commodity investments are not considered a good proxy for physical commodities as they exhibit considerably higher levels of volatility and the underlying companies themselves often hedge their commodity exposure.
Ibbotson ran some further analysis using commodity equities to represent the commodities allocation and found that this did not offer sufficient diversification qualities to justify a separate allocation.
For more information on Ibbotson’s Asset Allocation methodology, click here