Key takeaways
- Commodity indexes are rallying as government stimulus and low interest rates fuel inflation expectations.
- Commodities can help investors hedge against inflation and diversify portfolios.
- Commodity exchange traded products (ETPs) offer convenient and affordable access to broad baskets of commodities.
Expectations for rising inflation in a strengthening, post-COVID economy have helped lift commodity prices in 2021 , and recent moves highlight how commodities can offer diversification as markets price in potential risks of stimulus-fueled growth.
Commodities, as represented by the S&P GSCI - a benchmark of 24 commodities in agriculture, energy and metals — is the top-performing asset class through the middle of March, up 15% through March 26, outpacing all other asset classes.1 It’s a sharp turnabout from 2020, when commodities lagged behind stocks and bonds.