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.