Investing in precious metals, agricultural, energy and other commodities can help diversify stock and bond portfolios, potentially hedge against inflation and provide exposure to assets that can help achieve long-term financial goals. iShares offers exchange traded products (ETPs) for investors seeking access to the commodities markets.
Approaches to commodity investing with iShares
Investing in commodities doesn’t have to be complicated. iShares ETPs offer two distinct ways to access them.
| Precision Exposure | Broad Exposure | |
|---|---|---|
| Approach | Target the price performance of gold or silver | Target a broad range of commodities including energy, metals and agriculture |
| iShares ETPs | IAU, IAUF, SLV | GSG, CCRV, COMT, CMDY |
Potential benefits of commodity investing
1. Portfolio diversification
Commodity prices often fluctuate based on weather, geopolitical turmoil and other factors that are generally less correlated to prices for stocks and bonds. For this reason investors often use them to help diversify their stock and bond portfolios.
2. Help protect against inflation
Commodities prices have historically risen in tandem with the general price level of goods and services—also known as inflation. Exposure to broad and single commodity ETPs can help portfolios protect against rising inflation.
Performance over different inflationary periods
Source: Bloomberg data from August 1998 to June 2020. Equities represented by the S&P 500 Index; Fixed Income represented by the Bloomberg Barclays US AGG Bond Index; Broad Commodities represented by the Bloomberg Commodity Index; Gold represented by the Gold Spot Price; Silver represented by the Siler Spot Price. Inflation periods defined by CPI quarterly changes by more than 0.31% from the median change of 0.58%. Annualized returns based on quarterly return data %. For illustrative and educational purposes. Not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Index performance is for illustrative purposes only. Index performance does not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results.
3. Potential returns
As mentioned above, commodity prices are less correlated to fluctuations in stocks and bonds. As a result, commodities can provide portfolio diversification throughout the stages of the business cycle. iShares commodity ETPs offer investors a potential way to align their portfolios with their views on how they see future economic growth.