Commodities could surge by as much 40% — taking them far into record territory — should investors boost their allocation to raw materials at a time of rising inflation, according to JPMorgan Chase & Co.
While allocations appear to be above historical averages on commodities, they are not very overweight, according to strategists led by Nikolaos Panigirtzoglou. That suggests scope for gains in raw materials, they said.
Commodities soared to a record last month as Russia’s invasion of Ukraine roiled markets, boosting the prices of everything from oil to wheat. That’s helped to spur already-elevated global inflation and a tougher response from the Federal Reserve, prompting investors to weigh reshuffling the weighting of assets between stocks, bonds and raw materials in their portfolios.
“In the current juncture, where the need for inflation hedges is more elevated, it is conceivable to see longer-term commodity allocations eventually rising above 1% of total financial assets globally, surpassing the previous highs,” the JPMorgan strategists wrote in an April 6 note. All else being equal, that “would imply another 30% to 40% upside for commodities from here,” they said.
Commodities have rallied across the board this year, with gains in energy, metals and crops. Among the gainers, Brent crude — the global oil benchmark — has surged more than 30% and hit the highest level since 2008 last month.
Among leading banks, Goldman Sachs Group Inc. has also been consistently bullish on raw materials, in part on their role as an inflation hedge. Goldman warned in an April 7 note that a global copper shock was under way.
Advisors discuss their use of AI now and how it will change going forward
Medicare scam, pandemic benefit theft, offshore tax evasion — federal prosecutors are casting a wide net.
Report finds that pension income acts as a financial lifeline for retirees facing late-life shocks and raises urgent questions about the DC-only future.
Nine-month electronic trading freeze and share lending program at the center of dismissed claim.
Meanwhile, Rossby Financial's leadership buildout rolls on with a new COO appointment as Balefire Wealth welcomes a distinguished retirement specialist to its national network.
As technical expertise becomes increasingly commoditized, advisors who can integrate strategy, relationships, and specialized expertise into a cohesive client experience will define the next era of wealth management
Growth may get the headlines, but in my experience, longevity is earned through structure, culture, and discipline
