The Case for Broad-Based Commodities | ETF Trends

With the market facing extreme uncertainty and numerous headwinds, commodities offer investors a non-correlated asset class that can diversify a traditional stock and bond mix.

In the upcoming webcast, The Case for Broad-Based Commodities, Hakan Kaya, Managing Director, Neuberger Berman, will outline the benefits of a broad-based commodities approach and why it is critical in the current market environment.

Neuberger Berman recently converted its Neuberger Berman Commodity Strategy Fund into the Neuberger Berman Commodity Strategy ETF (NYSE Arca: NBCM). Based on the mutual fund’s track record of over ten years, the new ETF and the portfolio managers, Hakan Kaya, Ph.D., David Wan, and Michael Foster, will remain faithful to the original fund strategy.

“The firm continually assesses where our investment expertise intersects with client demand and preference for an ETF vehicle,” Scott Kilgallen, Head of North America Intermediary Client Coverage, said in a note. “Commodities can enhance strategic asset allocation by providing diversification benefits while potentially mitigating the effects of inflation.”

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.

Neuberger Berman remains positive on the commodities outlook ahead, even in the face of potential risks associated with a hawkish Federal Reserve monetary policy or a weakening global economy.

“While the Fed may be able to kill demand by substantially, it cannot control producer behavior. Suppose that the Fed’s actions do reduce demand, let’s not forget that supply would decrease as well, perhaps even more, and this is a trend we’re already witnessing. Key producer actions point to scarcity. Most recently, OPEC cut production quotas, and miners are reducing output. As the scarcity becomes severe at a time when risk appetite and demand (especially Chinese lockdown affected demand) turns, commodities have the potential to rally significantly,” Neuberger Berman said in a note.

Financial advisors who are interested in learning more about the commodities market can register for the Wednesday, October 26 webcast here.