Recession fears, tariff trade wars, and more plague March markets. As equity drawdowns continue mid-month, investors looking to increase portfolio diversification would do well to consider commodities. The Neuberger Berman Commodity Strategy ETF (NBCM ) gained while equity and bond indexes fell in March.
Ongoing, escalating tariff wars increasingly take their toll on markets, with major equity indexes near or in correction territory as of March 13, 2025, reported CNBC. This week alone, the S&P 500 is down 4.3% while the Nasdaq Composite fell 4.9%.
The S&P 500 slid into correction territory at close on Thursday, while the Nasdaq slipped further into correction territory, down more than 14% from record highs. Small-caps fared even worse, plummeting close to bear market territory as of Thursday, with losses of 19% from recent 52-week highs.
Treasury yields fell as prices rose (prices and yields move inverse to each other in bonds), as investors sought safe havens on recession fears. Gold proved another big beneficiary of the flight from equities, with prices hitting a new record high of $2,984.30, up 1.5%, reported WSJ.
Commodities hold notable appeal for the diversification they potentially bring to portfolios. With low to sometimes negative correlations to stocks and bonds, commodities are worth consideration this year. You need look no further than NBCM for diversified performance in a challenging market environment.
Look to Commodities for Diversification Opportunities
NBCM is currently up 5.51% on a total returns basis year-to-date as of March 12, 2025. While the broad bond market remained relatively flat YTD, the S&P 500 fell 4.64% over the same period. The two were measured using the iShares Core US Aggregate Bond ETF (AGG ) and the SPDR S&P 500 ETF Trust (SPY ) as proxies.
The fund also offers strong diversification potential for traditional portfolios. NBCM had correlations of just 0.33 to SPY, while it was negatively correlated to the AGG at -0.07 according to VettaFi Pro data. Correlations were measured using weekly returns going back up to three years.
The actively managed NBCM seeks total returns by investing in a diverse portfolio of commodities. By using a risk-weighted approach, it seeks to reduce the impacts of market volatility. The strategy also focuses on commodity scarcity and works to hedge for the potential of backwardation and demand.
NBCM invests globally across six different sectors and 28 commodities. These include gold and other metals, oil, agricultural products, and natural gas. Gold is currently the largest commodity within the fund, at a 17.74% weight as of March 12, 2025. Brent crude followed at 7.54%, and WTI crude at 6.34%.
The fund managers use quantitative models and fundamental analysis when evaluating securities for short- and long-term opportunities and optimizing roll yield. NBCM invests in long and short positions in commodities and fixed income securities, most of which are investment-grade bonds.
NBCM carries an expense ratio of 0.65%.
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