Advisors dig into the great commodity question

investmentnews.com:

The question of whether gold, oil and other commodities are right for individual client portfolios has always been a hard one for financial advisors to mine. So let’s dig into it.

TheInvesco DB Commodity Index Tracking Fund is flat year to date as inflation has moderated over the course of 2023 thanks to the Federal Reserve’s aggressive rate hike campaign. That said, over the past five years, the fund is up almost 50% as a result of the step-up in inflation caused in part by the pandemic. The fund uses futures contracts to invest in light sweet crude oil, heating oil, gasoline, natural gas, Brent crude, gold, silver, aluminum, zinc, copper, corn, wheat, soybeans and sugar.

In other words, it’s the hard stuff, and generally the type of asset that financial advisors view as different from plain vanilla stocks and bonds. A macro trade, if you will, and not meant for plain vanilla client portfolios.

But Robert Minter, director of ETF strategy at abrdn, doesn’t believe that’s the case. He argues for commodities as a perfectly acceptable part of individual investor portfolios.

“Commodities can go higher or lower based off of both demand and supply. And right now we have a supply problem. Over the last three years, we’ve had a supply problem. And so we need to focus a little less on the macro, a little more on the supply problem,” Minter said.

Brian Hartmann, partner at Granite Bridge Wealth Management, agrees with Minter and adds a healthy amount of exposure to commodities to client portfolios in almost all market cycles.

“Our advisors take the time to educate our clients on how commodities may help balance their holdings and myth-bust some of the misconceptions that are commonly associated with owning this asset class,” he