Integrating commodities into modern portfolio strategy

In today’s unpredictable markets, advisors are re-evaluating what makes a portfolio truly resilient. More than half of financial professionals surveyed believe that the traditional 60/40 mix of stocks and bonds no longer sufficiently protects clients in today's environment.

In its place, many advisors are pivoting toward alternative assets – including commodities – to bolster diversification and downside defense. In fact, in a recent survey conducted by Aberdeen Investments in partnership with CoreData Research, where we surveyed 300 US financial advisors, 70% of advisors cite improving downside protection as a top priority for the next year, and nearly half (46%) list increased diversification as a key objective.¹

To achieve these goals, advisors are expanding the toolkit beyond equities and bonds. More than 54% report an increasing focus on alternatives in 2026, and a significant portion of this push is directed at commodities – with 37% of advisors planning to increase allocations to precious metals, and 29% to broad commodities in 2026 (Chart 1).

Commodities as an attractive shock absorber

This shift reflects a broader realization that adding new ingredients to the mix may be essential for potential stability. By introducing assets with different performance patterns than stocks or bonds, advisors aim to smooth out portfolio ups and downs.

Commodities, in particular, have emerged as part of this resilience strategy. Among those advisors most focused on diversification, a majority are turning to broad commodity investments to capture the kind of true diversification that traditional asset classes alone may not provide.

These alternatives, specifically commodities and precious metals, have historically shown low correlation to standard equity or fixed income holdings, may make them attractive as shock absorbers when markets turn volatile.

Commodities as a defensive anchor

Commodities are increasingly prized for their defensive characteristics in portfolio construction. Three in four advisors surveyed expect that adding commodities will enhance portfolio diversification and downside protection not just over the next year, but even five years out – an indication of confidence in commodities’ enduring low-correlation benefits (Chart 2).

Tactical upswing potential

In the near term, advisors also see situational opportunities for commodities. Market factors like equity and bond volatility or the prospect of interest rate cuts are cited as tailwinds that could drive commodity prices higher in the short run. In our research, four out of ten advisors identified volatility in traditional markets as a reason commodities could perform well, and a third pointed to expectations of shifting monetary policy as a boon for commodity markets.

These views make commodities attractive as a tactical allocation when advisors anticipate late-cycle turbulence or policy-driven market moves. For example, if bond yields decline, hard assets and commodities might gain favor as investors seek alternative stores of value. Such dynamics have led over a third of current alternative-asset users to plan increases in commodity holdings imminently – 37% intend to raise allocations to precious metals and 29% to broad commodities in the next year. In practice, this means advisors are not only talking about commodities as a concept but actively moving client dollars into the asset class as a protective measure.

Despite their enthusiasm for the defensive merits of commodities, advisors remain realistic about return expectations. Notably, only about one-third of those surveyed think commodity investments will significantly outperform their historical averages in the coming years. In other words, advisors are not banking on blockbuster returns from this asset class.

Instead, they value commodities for delivering steady potential benefits like diversification, inflation hedging, and capital preservation. This measured outlook underlines that the motivation to add commodities is driven less by speculation and more by a desire for modest, reliable contributions to overall portfolio resilience.

Commodities as a strategic growth play

While commodities have clear defensive uses, they are no longer seen as merely a temporary shelter in a storm. Advisors increasingly view them as a strategic part of long-term portfolio positioning – a way to tap into structural growth themes that can unfold over years or even decades. In our survey, 55% of advisors agreed that global megatrends will provide a reliable tailwind for commodity assets in the years ahead (Chart 3). This signals a growing recognition that commodities stand to benefit from the same powerful forces driving the global economy forward.

Secular drivers on the horizon

When asked which structural trends could sustain commodity growth, financial advisors most frequently pointed to deglobalization and onshoring of supply chains as the top driver. This reflects a world where trade patterns are evolving and nations are placing greater emphasis on securing local supply of critical resources – a shift that could increase demand (and prices) for certain commodities.

Several of the most frequently cited megatrends are outlined below, along with the commodity demand channels through which they may play out:

AI and broader technology adoption: Growth in AI and digital infrastructure increases demand for:

Infrastructure spending: Modernization of bridges, roads, power grids, and broadband supports sustained demand for:

Energy transition and electrification: The shift toward cleaner power and electrified end uses can reshape commodity demand by:

Together, these megatrends create a picture in which a broad range of commodities could see persistent demand over time, independent of the typical boom-bust cycles.

It’s not just gold and oil commanding attention; everything from copper and lithium to agricultural goods could be influenced by these secular shifts. Importantly, about half of advisors also view commodities as an efficient avenue to gain exposure to these themes.

Rather than picking individual stocks or sectors to play a trend like AI or deglobalization, commodities can serve as a more direct, pure play on the underlying economic changes (e.g. increased need for certain metals or materials).

Building a core allocation

Reflecting this long-range outlook, many advisors are treating commodities as a strategic allocation, not just a timing-based trade. Nearly 68% of those who currently invest in commodities say these assets play a strategic role – or even both a strategic and tactical role – in client portfolios. In fact, almost half (47%) report using commodities in both ways: as an ongoing core holding and for opportunistic adjustments. This is a notable departure from the past, when commodities might have been used solely as a short-term hedge during crises.

Now, a substantial share of advisors see a permanent place for commodities in the portfolio, aiming to keep a baseline exposure that can capture those secular growth drivers over time. The rising interest is broad-based enough that roughly one in two advisors say their clients today are more open to commodities investments than they were 5–10 years ago.

Simply put, commodities are moving from the periphery into the mainstream of portfolio strategy, valued for a blend of offense and defense: they can help protect wealth in turbulent periods and participate in growth during economic expansions.

Liquid tools and increasing allocations

If commodities are to take on a larger role in portfolios, convenient and flexible access is crucial. Here, advisors have made their preferences clear: exchange-traded funds (ETFs) have become the dominant vehicle for commodity exposure.

According to our survey, 60% of advisors who invest in commodities use sector-specific commodity ETFs (focused, for example, on energy or metals), and 56% use broad commodity index ETFs that cover a spectrum of resources.

By contrast, relatively few are turning to more complex or less liquid avenues such as commodity-focused hedge funds, managed futures programs, or private placements. The popularity of ETFs comes down to simplicity and liquidity. These funds offer daily trading, low fees, and transparency, which align perfectly with advisors’ stated preference for liquid alternatives (61% of advisors say they favor liquid alternatives for any new allocations).

Whether the goal is short-term tactical moves or a long-term position, we believe ETFs make it easy to dial commodity exposure up or down as needed without locking up capital or introducing unnecessary complexity.

The balance between targeted and broad

Advisors are also finding a balance between targeted and broad commodity strategies. A majority (roughly 60%) express a preference for targeted commodity investments – for instance, focusing on a single segment like precious metals or energy – citing the ability to customize portfolios and align with specific investment themes or convictions.

This often ties to familiarity: advisors tend to feel most knowledgeable about well-known segments such as gold, oil, or other energy commodities, so they gravitate toward these areas. However, the survey data shows that broad-based commodity strategies are also widely used, and in some cases explicitly favored.

In fact, broad commodity index ETFs, which span multiple categories (energy, metals, agriculture, etc.), are a close second in usage. Advisors who employ commodities both strategically and tactically especially appreciate broad ETFs, as they provide one-stop diversification across the asset class and reduce the risk of missing out on moves in any single commodity market (Chart 4).

Crucially, the commitment to commodities – while rising – still has a lot of headroom. As noted, the average commodities allocation is only 4.6% today (Chart 5).

But when advisors were asked to envision the optimal allocation in a moderate-risk portfolio, many indicated a higher number: 44% of advisors believe commodity exposure should ideally be above 5%, with a significant contingent suggesting 6.0% or more. Some even argue for allocations in the +10.0% range for certain clients or strategies (Chart 6).

This gap between current positioning and perceived ideal levels suggests that as comfort with commodities increases (and as needs for diversification and inflation hedges persist), we could see further increases in commodity allocations across portfolios. In effect, the industry may be at an inflection point where commodities transition from a niche holding to a more core portfolio component, on par with other major asset classes.

Endnotes

¹ CoreData is a global specialist market research consultancy and unique collaboration of experienced research, marketing, industry, and media professionals.

Important information

An investor should consider the investment objectives, risks, charges and expenses of the Funds carefully before investing. To obtain a prospectus containing this and other important information, call 844-ETFs-BUY (844-383-7289) or visit here. Read the prospectus carefully before investing.
Fund Risk: There are risks associated with investing including possible loss of principal. Commodities generally are volatile and are not suitable for all investors. There can be no assurance that the Fund’s investment objective will be met at any time.  The commodities markets and the prices of various commodities may fluctuate widely based on a variety of factors. Because performance is linked to the performance of highly volatile commodities, investors should consider purchasing shares of the Fund only as part of an overall diversified portfolio and should be willing to assume the risks of potentially significant fluctuations in the value of the Fund.
The Fund employs a “passive management” – or indexing – investment approach designed to track the performance of the Index. The Fund will generally seek to hold similar interests to those included in the Index and will seek exposure to many of the commodities included in the Index under the same futures rolling schedule as the Index. The Fund will also hold short-term fixed-income securities, which may be used as collateral for the Fund’s commodities futures holdings or to generate interest income and capital appreciation on the cash balances arising from its use of futures contracts (thereby providing a “total return” investment in the underlying commodities).
Through holding of futures, options and options on futures contracts, the Fund may be exposed to (i) losses from margin deposits in the case of bankruptcy of the relevant broker, and (ii) a risk that the relevant position cannot be closed out when required at its fundamental value. In pursuing its investment strategy, particularly when rolling futures contracts, the Fund may engage in frequent trading of its portfolio of securities, resulting in a high portfolio turnover rate.
As a “non-diversified” fund, the Fund may hold a smaller number of portfolio securities than many other funds. To the extent the Fund invests in a relatively small number of issuers, a decline in the market value of a particular security held by the Fund may affect its value more than if it invested in a larger number of issuers. The value of shares may be more volatile than the values of shares of more diversified funds.
During situations where the cost of any futures contracts for delivery on dates further in the future is higher than those for delivery closer in time, the value of the Fund holding such contracts will decrease over time unless the spot price of that contract increases by the same rate as the rate of the variation in the price of the futures contract. The rate of variation could be quite significant and last for an indeterminate period of time, reducing the value of the Fund.
Changes in the laws of the United States and/or the Cayman Islands, under which the Fund and the Subsidiary are organized, respectively, could result in the inability of the Subsidiary to operate as intended and could negatively affect the Fund and its shareholders.
To the extent the Fund is exposed directly or indirectly to leverage (through investments in commodities futures contracts) the value of that Fund may be more volatile than if no leverage were present.
In order to qualify for the favorable U.S. federal income tax treatment accorded to a regulated investment company (“RIC”), the Fund must derive at least 90% of its gross income in each taxable year from certain categories of income (“qualifying income”) and must satisfy certain asset diversification requirements.  Certain of the Fund’s investments will not generate income that is qualifying income.  The Fund intends to hold such commodity-related investments indirectly, through the Subsidiary. The Fund believes that income from the Subsidiary will be qualifying income because it expects that the Subsidiary will make annual distributions of its earnings and profits.  However, there can be no certainty in this regard, as the Fund has not sought or received an opinion of counsel confirming that the Subsidiary’s operations and resulting distributions would produce qualifying income for the Fund.  If the Fund were to fail to meet the qualifying income test or asset diversification requirements and fail to qualify as a RIC, it would be taxed in the same manner as an ordinary corporation, and distributions to its shareholders would not be deductible by the Fund in computing its taxable income.
Investors buy and sell shares on a secondary market (i.e., not directly from Trusts). Only market makers or “authorized participants” may trade directly with the Trusts, typically in blocks of 25k to 100k shares.  
Bloomberg®, Bloomberg Commodity Index Total Return^SM and Bloomberg Commodity Index 3 Month Forward Total Return^SM are service marks of Bloomberg Finance L.P. and its affiliates, including Bloomberg Index Services Limited (“BISL”), the administrator of the indices (collectively, “Bloomberg”) and have been licensed for use for certain purposes by abrdn Inc.  Bloomberg is not affiliated with abrdn Inc. and Bloomberg does not approve, endorse, review, or recommend abrdn Bloomberg All Commodity Strategy K-1 Free ETF and abrdn Bloomberg All Commodity Longer Dated Strategy K-1 Free ETF.  Bloomberg does not guarantee the timeliness, accurateness, or completeness of any data or information relating to Bloomberg Commodity Index Total Return^SM and Bloomberg Commodity Index 3 Month Forward Total Return^SM. 
The statements and opinions expressed are those of the author and are as of the date of this report. All information is historical and not indicative of future results and subject to change. Reader should not assume that an investment in any securities and/or precious metals mentioned was or would be profitable in the future. This information is not a recommendation to buy or sell. Past performance is not a guide to future results.
The abrdn Silver ETF Trust, abrdn Gold ETF Trust, abrdn Platinum ETF Trust, abrdn Palladium ETF Trust and abrdn Precious Metals Basket ETF Trust are not investment companies registered under the Investment Company Act of 1940 or a commodity pool for purposes of the Commodity Exchange Act. Shares of the Trusts are not subject to the same regulatory requirements as mutual funds. These investments are not suitable for all investors. Trusts focusing on a single commodity generally experience greater volatility.
Commodities generally are volatile and are not suitable for all investors. Please refer to the prospectus for complete information regarding all risks associated with the Trusts.
The value of the Shares relates directly to the value of the precious metal held by the Trust and fluctuations in the price could materially adversely affect investment in the Shares. Several factors may affect the price of precious metals, including: A change in economic conditions, such as a recession, can adversely affect the price of the precious metal held by the Trust. Some metals are used in a wide range of industrial applications, and an economic downturn could have a negative impact on its demand and, consequently, its price and the price of the Shares; Investors’ expectations with respect to the rate of inflation; currency exchange rates; interest rates; Investment and trading activities of hedge funds and commodity funds; and global or regional political, economic or financial events and situations. Should there be an increase in the level of hedge activity of the precious metal held by the Trust or producing companies, it could cause a decline in world precious metal prices, adversely affecting the price of the shares.  Should there be an increase in the level of hedge activity of the precious metal held by the Trust or producing companies, it could cause a decline in world precious metal prices, adversely affecting the price of the shares.
Also, should the speculative community take a negative view towards the precious metal held by the Trusts, it could cause a decline in prices, negatively impacting the price of the shares. There is a risk that part or all of the Trusts’ physical precious metal could be lost, damaged or stolen. Failure by the custodian or sub-Custodian to exercise due care in the safekeeping of the precious metal held by the Trusts could result in a loss to the Trusts.
The Trusts will not insure its precious metals and shareholders cannot be assured that the custodian will maintain adequate insurance or any insurance with respect to the precious metals held by the custodian on behalf of the Trust. Consequently, a loss may be suffered with respect to the precious metal that is not covered by insurance. Commodities generally are volatile and are not suitable for all investors.
Diversification does not eliminate the risk of experiencing investment losses.
This material must be accompanied or preceded by the prospectus. Carefully consider each Trust’s investment objectives, risk factors, and fees and expenses before investing. To view the prospectus, please click here – abrdn Silver ETF Trust, abrdn Gold ETF Trust, abrdn Platinum ETF Trust, abrdn Palladium ETF Trust and abrdn Precious Metals Basket ETF Trust.
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