Year-to-date, small capitalization equities have rallied alongside the broad market, as bullish momentum continues to be a dominating force and investors become more risk tolerant. These stocks typically offer more promising long-term growth potential than their large cap counterparts; however, investors will have to take on slightly higher levels of risk and volatility. Already this year, the Russell 2000 Index has surged more than 20%, urging investors to take a closer look at these promising securities [for more commodity news and analysis subscribe to our free newsletter].
With interest rates stuck at all-time lows, and expected to remain there for the foreseeable future, investors are looking to commodities in hopes of evading the devaluation of the U.S. dollar. On the flip side, recent moves by the Fed and European Central Bank to “beef up” their respective stimulus efforts have many investors thinking about future inflation. Precious metals have long been the go-to asset class for investors looking to fortify their portfolio against inflation; however, investing in the companies that mine for these resources is also a viable strategy [for more precious metals news and analysis subscribe to our free newsletter].
Commodity investing has been extremely popular in recent years as investors have discovered the benefits that these investments can offer for an individual portfolio. Exposure to commodities offers benefits like low correlation, inflation hedges, and also heavy exposure to some of the world’s fastest growing markets. But there is still something of a disconnect between income investors and commodities, as these investments are typically seen as growth plays or simply left for active traders. But those who overlook commodity stocks with even mediocre yields could be missing out [see also Jim Rogers Says: Buy Commodities Now, Or You’ll Hate Yourself Later].