From commodities to fixed income, here’s how to safeguard your portfolio from uncertainty.
Transcript:
CAROLINE WOODS: Joining me now, Jake Schurmeier, portfolio manager, head of fixed income currencies and commodities multi-asset solutions team at Harbor Capital Advisors. Jake, Thanks so much for joining us.
JAKE SCHURMEIER: Thanks for having me, Caroline.
CAROLINE WOODS: All right. So I think given your title, there’s a lot to hit here. And I think portfolio construction is a good place to start. Does 60/40 still work in this environment, or do investors need to consider a different playbook?
JAKE SCHURMEIER: Yeah, I mean I think generally it still does. You know, you still have your exposure to growth the US economy kind of the long term prospects of equities. So you need to keep that ballast. You know fixed income is the part that’s a little challenge going forward. We’re going to have higher inflation over the next year. And we expect it to be higher and more volatile going forward. And so in that environment, you need something that diversifies a bit more, whether that’s commodities, whether that’s kind of market neutral strategies, other kind of true alternatives that can diversify for those environments where inflation is very high.
CAROLINE WOODS: So on that note, when you look across equities, bonds, currencies, commodities, what’s really driving your investment decisions right now?
JAKE SCHURMEIER: We think commodities look the most attractive to us right now. So gold is a big portion of that. You know, you’re making a play against kind of the weaker dollar kind of concerns about US institutions, inflation. And then more broadly, there’s a secular kind of demand for commodities going forward, whether it’s building out AI data centers, whether it’s electrification, EVs, all of those things are going to take a lot more copper, aluminum, silver, all of these things to conduct electricity, to build concrete, to build steel, things like that. So we think there’s a secular demand for commodities going forward as well.
CAROLINE WOODS: OK so on that note, you mentioned the fact that gold is at record highs right now. Is it too late to get in to gold or what commodities actually look attractive to you?
JAKE SCHURMEIER: Right now. We don’t think it’s too late. So, you know, on a real inflation adjusted basis, we’re kind of at all time highs. But there’s reasons for that. You know, we’ve had the US led institutions for the last 80 years. And those are unraveling in many different ways. Whether that’s tariffs, whether it’s kind of decisions around NATO, things like that. And so in that environment, you’re just going to have more geopolitical volatility, more inflation volatility. And you want something that, you know, has a 6,000 year track record of protecting against that.
CAROLINE WOODS: Do you have a price target for gold?
JAKE SCHURMEIER: No, we don’t.
CAROLINE WOODS: And in terms of using it or other commodities as a hedge against inflation, how much of that is driving your investment decisions in terms of even putting commodities in your portfolio?
JAKE SCHURMEIER: We think that’s a big part of it. Inflation risk not only to be higher but just more volatile going forward. And so there’s just going to be more volatility across, broader assets. So that’s a big portion of it. But we do think dollar weakness kind of this institutional anti-institutional play. We think that’s a big part of the commodity story as well……
Subscribe |
Earn. Live. Invest. |
TheStreet Pro |
#Investing #Stocks #WallStreet
source
