Return-oriented investors do not pay a premium for benchmark returns on financial assets -- e.g., matching the stock and bond indices used to benchmark institutional portfolios (beta). Demonstrating a consistent
ability to add alpha, on the other hand, is value added to these
managers and their boards. Further along the investment continuum, the ability to deliver orthogonal alpha, i.e., returns uncorrelated with and independent of the financial assets in the portfolio -- commands an even
greater premium.

Risk-averse managers value investments that lower portfolio volatility and stabilize returns. This, too, is achieved with assets that provide orthogonal returns: By lowering portfolio volatility and stabilizing returns, these managers improve their portfolios' Sharpe Ratios.

Until recently, both types of managers typically did not think of
commodities as the natural choice to meet both sets of goals vis--vis
risk reduction and orthogonal returns. While this is puzzling given the historical performance of commodities, the industrial practice has been changing.