Investors interested in diversifying their portfolios with other commodities exposure also have a number of ETF options available to them. ETF Securities recently came out with a line of ETFs to outperform the widely observed Bloomberg Commodity Indices without the need to worry about troublesome K-1 forms come tax season, including the actively managed ETFS Bloomberg All Commodity Strategy K-1 Free ETF (NYSEArca: BCI), ETFS Bloomberg All Commodity Longer Dated Strategy K-1 Free ETF (NYSEArca: BCD) and ETFS Bloomberg Energy Commodity Longer Dated Strategy K-1 Free ETF (NYSEArca: BEF).
“Given elevated valuations among financial assets and on-going geopolitical, monetary policy, and fiscal policy risks, investors may shift to real assets,” Gold said.
Furthermore, real assets may also stand out during rising inflationary periods as they are a better store of wealth. Gold pointed out that input costs to producers continue to rise with higher wage costs from a tightening labor market and inflation is picking up speed in the form of a weaker U.S. dollar. Looking ahead, market expectations for inflation have also risen in recent years as the economy continues to expand.
“An environment of elevated and rising inflationary pressures may benefit real assets compared to financial assets. Real assets have a high sensitivity (or beta) to inflation and typically perform well when inflation increases,” Gold said.