In the debate about whether investors should consider including a portfolio allocation to commodities, one of the main arguments against doing so has been the huge amount of cash flowing into commodities over the past decade. The influx has rendered past data irrelevant because this increased demand virtually doomed commodity futures contracts to trade in large contango.

When contango exists, commodity funds have to sell contracts at low near-month prices and buy into costly further-month contracts. That can cause the returns of a fund to trail the returns of spot prices by large amounts. And while this may have been the case in recent years, the situation began to change in the second half of 2013.

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