COMmentary

When investors start to worry about inflation, they often gravitate towards commodities to protect their purchasing power. So, it’s no surprise that everything from metals to energy saw a burst of buying in the last few years. But, in recent months, many commodities have sold off, with some investors convinced that disinflation is here to stay. Could it be a good time for contrarian investors to add commodities to their portfolio at reasonable prices?

All indexes are not created equal. Take the NASDAQ-100 Index, which jumped more than 35% in the first half of the year. Sure, it’s comprised of 100 different stocks, including many of the mega-cap growth names that have powered the market higher. But the NASDAQ-100 Index is a capitalization-weighted index, meaning that ETFs tracking it have more exposure to the large names than the smaller companies.

As businesses and employees adjust to the post-Covid work world, one thing is clear: working from home is here to stay. Now that the dust has settled, longer-term remote work trends are beginning to emerge. In fact, remote work has been described as “a classic example of an infant industry” that was given a temporary tailwind (Covid-19), but “remains competitive even after the support is removed.”1 The fact that remote work technology has become a sub-industry within itself incentivizes these companies to continue to support remote work and increases competition in the field.