While investors have been hyperfocused on bitcoin, they may have missed the rally in other commodities.
Commodities including bitcoin, gold, and copper have reached record highs recently. Commodities may well offer compelling returns through 2024.
How to Allocate to Commodities
A 5% strategic allocation to commodities can help investors gain the benefits without taking on too much volatility. This 5% allocation can act as a hedge against inflation, provide diversification, and help drive returns.
The Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF (PDBC) is a broad-basket commodity ETF. The fund offers exposure to a diverse group of the world’s most heavily traded commodities. This includes gasoline, Brent and WTI crude oil, diesel, gold, wheat, copper, zinc, corn, aluminum, sugar, soybeans natural gas, and silver.
The fund is actively managed, enabling the broad-basket commodity ETF to adjust exposure when market conditions warrant more exposure to a specific commodity.
Many investors avoid commodity ETFs due to misconceptions that all commodity ETFs require investors to file K-1 tax forms. Importantly, PDBC does not issue a K-1 form.
Adding Exposure to a Spot Bitcoin ETF
Many investors may not yet have any exposure to bitcoin. Investors may be able to enhance their overall portfolio returns and diversification by adding a small allocation to the Invesco Galaxy Bitcoin ETF (BTCO) within the commodities sleeve.
BTCO began trading in January 2024 alongside a slew of other spot bitcoin ETFs that had been long awaiting SEC approval.
There are benefits to getting exposure to spot bitcoin with the familiar ETF wrapper. Trading on Cboe, BTCO offers flexible entry to and exit from the asset class. Furthermore, BTCO can be held in investment accounts like brokerages and easily added to an investment portfolio.
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