Stock and bond markets have failed to provide strong returns this year, with the S&P 500 down more than 21% year-to-date while long-dated U.S. Treasuries are dropping about 34% and funds tracking the U.S. fixed income market losing roughly 16% in value. Supply-chain issues, high inflation, and a hawkish Federal Reserve are among the headwinds driving investor uncertainty and market selloffs this year.
While markets continue to graze in bear territory, commodities prices are increasing—partly due to those supply-chain issues bogging down stocks and bonds. Global corn and wheat prices rose on Oct. 31 after Russia pulled out of a deal allowing some grain exports from Ukraine to pass through the Black Sea. Per CNN, wheat futures on the Chicago Board of Trade jumped 5.5% to $8.74 a bushel, while corn futures rose 2.3% to $6.96 a bushel.
Combined, Ukraine and Russia account for nearly a third of global wheat exports. They’re also among the top three global exporters of barley, maize, rapeseed oil, and sunflower oil.
With inflation persisting and stock and bond markets continuing to be volatile, commodities can serve as both a hedge against inflation and a portfolio diversifier. For investors looking to either add broad-based commodities to their portfolios or expand their exposure, Neuberger Berman recently converted its commodity strategy fund into the Neuberger Berman Commodity Strategy ETF (NYSE Arca: NBCM).
The fully transparent active ETF invests in commodity-linked derivatives with an active risk-balanced, diversified approach that seeks to minimize the effects of market volatility. Tactical exposure adjustments expand potential alpha sources by considering top-down macro variables among commodity sectors along with individual commodity outlooks to take advantage of short- and long-term opportunities.
The ETF’s fixed income holdings are actively managed and designed to preserve capital and serve as collateral for the ETF’s derivative positions while also seeking to generate additional yield. The fund will continue to be managed by Hakan Kaya, David Wan, and Michael Foster.
“Advisors have seen the benefits of adding in broad commodities ETFs into client portfolios in 2022 to offset the pressure of falling equity and bond prices,” said Todd Rosenbluth, head of research at VettaFi. “It’s exciting to watch Neuberger Berman further penetrate the ETF market given its strong brand and investment expertise.”
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