BNP Paribas Wealth Management Commodities: the missing section in portfolio diversification
Sep 26, 2025
Explore the strategic importance of commodities in building robust investment portfolios. Discover the surprising underweight of commodities despite their strong recent performance. Learn how rising correlations between stocks and bonds are undermining traditional diversification strategies. Edmund discusses various commodity subcategories, their diverse nature, and ways to incorporate them into your investments, from ETFs to futures indices. Don't miss insights on why precious and industrial metals are gaining popularity!
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Commodities Are Widely Underowned
- Many investors are currently underweight commodities despite their strong recent returns.
- The S&P GSCI equal weight index has doubled over five years, showing commodities' strong performance.
Stocks And Bonds Move Together More
- Diversification is harder because global stocks are more concentrated and bonds now often move with equities.
- Five-year stock-bond correlations are strongly positive in major markets, reducing traditional cushioning effects.
2022 Shows Commodities' Cushioning Role
- In 2022 global bonds fell about 16% and global stocks fell about 18% in dollars.
- The Bloomberg Commodity Index rose about 16% that year, showing commodities' diversification benefit.