Strengthening Global Economy Could Lift Hard Asset ETFs

Natural resources or commodity-related ETFs can potentially help investors enhance their portfolios as the global economy continues to strengthen.

The hard asset category has just experienced a great fourth quarter and may maintain its current outlook.

“Underpinning nearly all positive commodity price performance during the quarter were improved demand fundamentals fueled by synchronized global growth among developed and emerging markets,” Shawn Reynolds, Portfolio Manager for VanEck, said in a research note.

Crude oil prices have firmed on rising demand and falling global inventories as the Organization of Petroleum Exporting Countries and other non-OPEC producers comply with oil production cuts.

In the diversified metals and mining category, metals prices have also steadily risen on a combination of global demand, Chinese capacity rationalization and company financial discipline that led to more balanced markets, improved pricing and stronger equity performance.

Looking at the agricultural segment, fertilizer demand was decent with both potash and urea markets coming back into balance after what appeared to be a bottom in the third quarter.