Commodities Outperform Tech Sectors by 12 Points
The IA Commodity/Natural Resources sector has delivered the highest returns among peer groups over the past five years, beating the Technology sector by approximately 12 percentage points. This performance has solidified the asset class as a core component of diversified portfolios.
Commodities have emerged as the top-performing asset class in recent market cycles. Over the last five years, the IA Commodity/Natural Resources sector has outpaced the IA Technology & Technology Innovation sector by roughly 12 percentage points. This data comes from FE Analytics and is highlighted in reporting by GN markets/commodities (en-US).
Investor allocation to these assets is nearly universal. A recent survey by Rathbones found that only 2% of professional investors reported no exposure to commodities. This adoption rate is higher than for emerging markets equities, small-caps, or bonds. The asset class has gained prominence due to sharp price movements in metals and energy.
Geopolitical Conflict Drives Oil Prices
The closure of the Strait of Hormuz in late February 2026 sent crude oil prices above $100 per barrel. The price remains near that level despite intermittent diplomatic progress between Iran and the United States. This event shifted market attention from precious metals to energy commodities. Gold and silver had previously led gains following the 2024 US election.
Diversification Benefits Across Asset Classes
Lynn Hutchinson, head of ETF and index solutions at Raymond James, describes commodities as a structural component of multi-asset portfolios. She notes that the asset class offers exposure to return drivers that behave differently from equities and bonds. This provides diversification during periods of inflation or geopolitical stress.
The commodity complex includes distinct sub-sectors with unique drivers. Energy markets respond to geopolitics and supply-demand dynamics. Industrial metals track long-term themes like electrification. Precious metals reflect real interest rates and US dollar strength. Agricultural products depend on weather and crop conditions.
Strategic Allocation Over Sector Concentration
Hutchinson advocates for broad commodity exposure rather than concentrating in a single sector. She cites supportive factors across the complex while acknowledging specific risks in individual areas. David Hood of RBC Brewin Dolphin also views commodities as essential in the current environment.
