Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Does anyone use commodities as a long-term hedge (not short-term tactical trade) against inflation? Which mutual funds, ETFs, CEFs, or other investments are used for inflation protection? How does this fit into your overall portfolio strategy and allocation? Gold has a reputation as being a good inflation hedge but its performance has been inconsistent.
I do not own a commodities or gold fund. I own a real assets fund with commodity exposure. Some limited commodities exposure thru a couple managed futures funds.
”Does anyone use commodities as a long-term hedge (not short-term tactical trade) against inflation?”
That’s the general idea behind the real assets fund.
”How does this fit into your overall portfolio strategy and allocations?”
The real assets fund is part of a broadly diversified portfolio. About 14.5% of total. The managed futures funds are part of a basket designed as a “chaos hedge”. Each apx 2% of total.
Thanks for your input. I've been thinking about commodities (off and on) for a while. I read Lewis Braham's Barron's article yesterday along with a Morningstar Magazine story regarding commodities earlier today. My post was prompted after reading both articles. The commodity space is complex and the asset class can be volatile. I was curious how others approached this asset class. I've glanced at PIMCO Inflation Response Multi-Asset Fund (PIRMX) and PIMCO CommoditiesPLUS Strategy Fund (PCLIX).
”The commodity space is complex and the asset class can be volatile.”
Everything from coca beans to nat gas. Generally played using derivatives. Tremendous variation among funds. Flashback - In March 2020, the price of a barrel of oil temporarily fell below zero dollars.
@LewisBraham authored the piece I linked. Thanks for the reminder.
@Observant1 - PIRMX looks like a good moderate approach. I find that with high-volatility funds it’s hard to hang on for long. So better served with a moderate approach from that standpoint.
observant1, until a decade ago, i was firmly in buffet's 'gold is a nonproductive asset' camp. then i noticed every asset allocation backtest , no matter how simple or complex, noted the benefit of a few % of gold (low fee futures were not available then). and not just in decades, but some over centuries with some attempt to normalize relative asset values.
so should i follow the data, or stick with uncle warren's folksisms? hell yes on warren, but for ~98% is good enough. that few % of gold has outperformed, and been a emotional stabilizer through 2 trump terms (and counting).
no, i accumulated ~2% (2016-2018) and let the etf run (except trimmed some individual miners which have kept running !). this is because the data seems fuzzy where to stop, but concern not needed below 10% allocation.
plus, the gains taxes. was not taking much more than i can offset losses elsewhere.
We have small allocation in gold and gold miners ETFs. They paid off well this year as they serve as a hedge against many market risk and instability. It maybe a bit late to add more with gold at over $3,000 an ounce.
Not interest in either oil or agriculture products if the country is heading to stagflation. In my humble opinion, quality bonds are more compelling at this time.
I have been recommending a 3-7% stake in precious metals in everyone's portfolios for decades. More than that is speculation, which is fine, but it can be very dicey. The game is so very rigged, it's tough to win.
There are many ways to take position. Safest is physical bullion. Geez, a roll of American Gold Eagles is the size of quarter and 2" tall. Hide it in the Oatmeal. It's worth about $75K. Get a 100 oz bar of silver, paint it black and use it as a door stop. About $4500. You can buy ETFs that invest in bullion but you pay 28% in gains. Ouch. You can hedge this with some weird products or simply stash them in a deferred or exempt account. You can buy the mining stocks. My only homerun was in the Big Bonanza that took place in in 2002-2011 period. I bought Silver Wheaton in the $2-3 range and it went to $43. There is nothing quite so exhilarating as playing the penny silver miners. Pure nose bleed.
You don't even have to simply play the PMs and can take a broad based stance in commodities with any number of funds and/or ETF. Again, determine if they're in mining stocks or the actual commodities. Even though they more or less mirror each others performance, they are played in different markets that act different ways. I've been collecting coins for 70 years and I don't have a clue.
If you're thinking about establishing a new position in the metals, I'd really suggest a Dollar Cost Averaging tactic. If you're a momentum investor, you might consider scaling in.
All the gold I want or need is owned via PRPFX. Commodities are tough to own, whether via a Real Assets funds or otherwise. The PIRMX fund mentioned prior does have a lower SD with bond-like returns, but still not sure I need it.
Re - “Hide it in the oatmeal.” LOL. No bullion today. But in the 70s I bought 2 or 3 K-Rands. Smoked a pipe back then and used to hide them in a large can of bourbon flavored pipe tobacco. Sweetest smelling K-Rands you ever did see!
I have long been convinced that gold and other "hard assets" are a compelling investment, because they were ignored and despised for so long. Gold provides a pretty good counterweight against currency devaluation and inflation.
Do you really think that with rising population, climate change, increasing temperatures agricultural prices will stay low for long? Uranium and other nuclear power components have turned around, as have rare earths.
You can get exposure with natural resources funds, futures or ETFs but natural resource funds and gold funds are probably the best ways to go.
Comments
I do not own a commodities or gold fund. I own a real assets fund with commodity exposure. Some limited commodities exposure thru a couple managed futures funds.
”Does anyone use commodities as a long-term hedge (not short-term tactical trade) against inflation?”
That’s the general idea behind the real assets fund.
”How does this fit into your overall portfolio strategy and allocations?”
The real assets fund is part of a broadly diversified portfolio. About 14.5% of total.
The managed futures funds are part of a basket designed as a “chaos hedge”. Each apx 2% of total.
I coulda been a contender! No, I use zero gold, silver, metals of any kind. Just not on my radar.
Thanks for your input. I've been thinking about commodities (off and on) for a while.
I read Lewis Braham's Barron's article yesterday along with a Morningstar Magazine
story regarding commodities earlier today.
My post was prompted after reading both articles.
The commodity space is complex and the asset class can be volatile.
I was curious how others approached this asset class.
I've glanced at PIMCO Inflation Response Multi-Asset Fund (PIRMX)
and PIMCO CommoditiesPLUS Strategy Fund (PCLIX).
https://fortune.com/2025/08/30/rural-america-economic-crisis-farmers-agriculture-exports-trump-trade-war-china/
Good advice—I feel bad for the farmers.
Flashback - In March 2020, the price of a barrel of oil temporarily fell below zero dollars.
@LewisBraham authored the piece I linked. Thanks for the reminder.
@Observant1 - PIRMX looks like a good moderate approach. I find that with high-volatility funds it’s hard to hang on for long. So better served with a moderate approach from that standpoint.
until a decade ago, i was firmly in buffet's 'gold is a nonproductive asset' camp.
then i noticed every asset allocation backtest , no matter how simple or complex, noted the benefit of a few % of gold (low fee futures were not available then). and not just in decades, but some over centuries with some attempt to normalize relative asset values.
so should i follow the data, or stick with uncle warren's folksisms? hell yes on warren, but for ~98% is good enough.
that few % of gold has outperformed, and been a emotional stabilizer through 2 trump terms (and counting).
Do you set a target allocation (let's say 2% - 5%) to gold and then rebalance to target periodically?
Thanks!
plus, the gains taxes. was not taking much more than i can offset losses elsewhere.
Not interest in either oil or agriculture products if the country is heading to stagflation. In my humble opinion, quality bonds are more compelling at this time.
I think you were trolling me with this thread.
I have been recommending a 3-7% stake in precious metals in everyone's portfolios for decades. More than that is speculation, which is fine, but it can be very dicey. The game is so very rigged, it's tough to win.
There are many ways to take position. Safest is physical bullion. Geez, a roll of American Gold Eagles is the size of quarter and 2" tall. Hide it in the Oatmeal. It's worth about $75K. Get a 100 oz bar of silver, paint it black and use it as a door stop. About $4500. You can buy ETFs that invest in bullion but you pay 28% in gains. Ouch. You can hedge this with some weird products or simply stash them in a deferred or exempt account. You can buy the mining stocks. My only homerun was in the Big Bonanza that took place in in 2002-2011 period. I bought Silver Wheaton in the $2-3 range and it went to $43. There is nothing quite so exhilarating as playing the penny silver miners. Pure nose bleed.
You don't even have to simply play the PMs and can take a broad based stance in commodities with any number of funds and/or ETF. Again, determine if they're in mining stocks or the actual commodities. Even though they more or less mirror each others performance, they are played in different markets that act different ways. I've been collecting coins for 70 years and I don't have a clue.
If you're thinking about establishing a new position in the metals, I'd really suggest a Dollar Cost Averaging tactic. If you're a momentum investor, you might consider scaling in.
Peace,
And so it goes,
rono
All the gold I want or need is owned via PRPFX. Commodities are tough to own, whether via a Real Assets funds or otherwise. The PIRMX fund mentioned prior does have a lower SD with bond-like returns, but still not sure I need it.
Re - “Hide it in the oatmeal.” LOL. No bullion today. But in the 70s I bought 2 or 3 K-Rands. Smoked a pipe back then and used to hide them in a large can of bourbon flavored pipe tobacco. Sweetest smelling K-Rands you ever did see!
Gold provides a pretty good counterweight against currency devaluation and inflation.
Do you really think that with rising population, climate change, increasing temperatures agricultural prices will stay low for long? Uranium and other nuclear power components have turned around, as have rare earths.
You can get exposure with natural resources funds, futures or ETFs but natural resource funds and gold funds are probably the best ways to go.