Commodity investors are expected to remain diversified as China’s electricity crisis rocks global energy and materials prices, according to a market analyst.
Although buyers of exchange-traded funds have invested nearly $ 12 billion in China-based ETFs this year, trying to profit from an element of the crisis may not be the best strategy, Dave said. Nadig from ETF Trends to CNBC’s “ETF Edge” this week.
“What we really understand or are starting to understand is the interconnection between the energy markets, industrial production and industrial metals, and I think it’s a little difficult to play one of between them, “said the company’s chief investment officer and chief research officer said in Monday’s interview.
For example, the United States Copper Index (CPER) fund climbed more than 4% last week as investors try to cash in on the widely used manufacturing metal.
“It’s a market that I think requires an iron stomach if you’re trying to make one-on-one calls,” Nadig said. “I think broad base exposure is the way to go.”
The GraniteShares Bloomberg Commodity Broad Strategy No K-1 ETF (COMB) fits that description, he said.
A low-cost offering invested in 23 commodity futures spanning the energy, metals and soft commodities markets, COMB’s global exposure may be ideal for some investors, said Will Rhind, Founder and CEO of GraniteShares, in the same interview.
“Of course, there are other more specific investments like gold, for example, like oil. There are other ways to be much more specific in terms of targeting different commodities,” said Rhind, whose company also manages the popular GraniteShares Gold Trust. (BAR).
“Whether you are specifically concerned with energy, whether you are concerned with food prices, whether you are only concerned with inflation itself, there are ways to find that in the ETF market,” said Rhind.
Another market analyst suggested avoiding commodities altogether.
“Don’t try to be a hero,” Matthew Bartolini, the SPDR’s head of Americas research at State Street, said in the same interview.
“A lot of people have been burned in the past trying to predict the trajectory or pace of different commodity prices, especially oil, which is so tied to different parts of the world economy, especially what’s going on. in China, but also the reopening, “Bartolini said.
Instead, he suggested investors consider the ripple effects of commodity price pressures. This could lead to higher inflation and higher prices for consumers, in which case things like inflation-protected Treasury securities could do well, he said.
“Don’t try to predict the unpredictable with so many unknowns in the market and just try to earn a few basis points in your bond portfolio, which is really hard to do these days,” Bartolini said.