How Commodities Can Diversify a Portfolio
Commodities: A Smart Way to Diversify Beyond Stocks and Bonds
You’ve heard it from Finfluencers, textbooks, and just about every personal finance podcast: diversify your portfolio.
But what does that actually mean?
For many, "diversification" ends up being shorthand for the same old 60/40 stock-bond allocation. And while this model may have worked in the past, it doesn’t hold up in today’s complex economic environment — especially with inflation and rising rates on the horizon.
That’s why at NEST, we explore real diversification. One often overlooked tool? Commodities.
If you want to understand how commodities can hedge your portfolio against inflation, join our NEST Edge webinar tomorrow, 10/13 at 12:30 PM CST. Sean and Dan will break it all down — from inflation trends to real asset strategies that aim to keep portfolios strong.
What Are Commodities?
Commodities are basic goods used in commerce, typically as raw materials for other products. Think:
Gold
Oil
Corn
Natural gas
Grains
Livestock
Newer types of commodities have emerged as well — for example, bandwidth in the tech sector.
How Can You Own Commodities?
There are four main ways investors can get exposure to commodities:
1. Commodity Companies
Invest in companies that produce or own commodities — like oil drilling firms or metal miners. These stocks give indirect exposure to commodity prices.
2. Mutual Funds or ETFs
Many funds are specifically designed to track commodity sectors. ETFs may follow the price of a single commodity or a basket of them, offering relatively low-cost, diversified exposure.
3. Futures Contracts
Futures are the most direct and high-risk method. These contracts allow you to speculate on the future price of a commodity. But they require experience, capital, and understanding — definitely not beginner-level investing. Futures markets are also heavily regulated by the CFTC, so compliance and understanding the rules are key.
4. Owning the Physical Commodity
While owning physical gold might be feasible, storing barrels of crude oil or bushels of soybeans? Less practical. This method is rare and typically reserved for specific commodities.
Why Commodities Are Risky — But Valuable
Commodities can hedge against inflation and add meaningful diversification, but they also bring high volatility. Prices are influenced not just by supply and demand, but by:
Geopolitical events
Natural disasters
Regulatory shifts
Global economic changes
Different methods of investing in commodities also come with different levels of risk. Futures, for example, are much more volatile than ETFs.
There’s no one-size-fits-all answer — and that’s exactly why research and professional guidance are essential.
Learn More: Join Our Webinar
Join us Wednesday, 10/13 at 12:30 PM CST for the NEST Edge webinar, where we’ll cover:
How commodities can fight inflation
The current macro environment
Real-world strategy implementation
Why data matters more than hype
We’ll also tie this into our broader investment approach — one that’s built on active management, not passive models, and backed by real analysis, not gut feelings.
Reach Out for Custom Advice
At NEST, we help Austin entrepreneurs, professionals, and families build smart portfolios that evolve with the markets. If you're curious about how commodities — or any other strategy — could fit into your financial plan, reach out directly at info@nestfinancial.net. That email goes straight to our partners.
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DISCLAIMER: This article is for educational purposes only and does not constitute investment or financial planning advice. For personalized recommendations, email us at info@nestfinancial.net.