In 2026, commodities have emerged as the standout performer, fueled by geopolitical tensions and supply disruptions. Funds like Invesco DB Commodity Index Tracking Fund DBC have climbed about 35% year to date (as of May 7, 2026).
These gains have compensated for more modest returns in other asset classes, reinforcing the value of including inflation-sensitive assets in a diversified portfolio. In fact, a portfolio built on balance rather than bold bets is proving its worth in 2026.
The classic 25/25/25/25 allocation—spanning stocks, bonds, cash and commodities —has surged about 26% so far this year (as of late April), marking its strongest showing since 1933, according to strategist Michael Hartnett, as quoted on Yahoo Finance. However, traditional commodities funds often struggle. Let’s tell you why (read: Will Equal Asset ETF Mix Beat Hype in Uncertain Markets?).
Why Traditional Commodity Funds Often Struggle
Most traditional commodity funds are designed to profit only when commodity prices move higher. However, these long-only strategies have often delivered inconsistent results over time.
Commodity performance is typically cyclical and erratic. Different commodity sub-sectors often behave differently across varying market environments, limiting broad-based upside. Large drawdowns can significantly hurt a portfolio’s long-term performance and recovery potential, per Direxion.
Given the inherent volatility in commodity markets, a long/flat approach can be better suited to rapidly changing and whip-sawing market conditions. Direxion Auspice Broad Commodity Strategy ETF COM is a fund that offers a good exposure in this regard.
Inside the COM ETF
The COM ETF looks to track the Auspice Broad Commodity Index (ABCERI), which is a rules-based long/flat broad commodity index that seeks to capture the majority of the commodity upside returns, while seeking to mitigate downside risk.
The Index is made up of a diversified portfolio of 12 commodities futures contracts (Silver, Gold, Copper, Heating Oil, Natural Gas, Gasoline, Crude Oil, Wheat, Soybeans, Corn, Cotton, and Sugar) that based on price trends can individually be Long or Flat (in Cash). The fund charges 72 bps in fees.
While most commodities have a long approach, sugar has a flat approach. Natural gas also has a flat approach. Most metals currently have a long approach.
Invesco Optimum Yield Diversified Commodity Stratgy No K-1 ETF PDBC in Focus
The Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF is an actively managed exchange-traded fund that seeks to achieve its investment objective by investing in commodity-linked futures and other financial instruments that provide economic exposure to a diverse group of the most heavily traded commodities.
ICE Brent Crude Oil Future, CME Feeder Cattle Future, NYBOT CSC Cocoa Future and NYBOT CSC C Coffee Future are some of the components of the fund. The fund charges 59 bps in fees.
Harbor Commodity All-Weather Strategy ETF HGER in Focus
The Harbor Commodity All-Weather Strategy ETF seeks to provide investment results that correspond, before fees and expenses, to the performance of the Quantix Commodity Index. The fund charges 68 bps in fees and yields 5.43% annually. This fund also has exposure to commodities like gold, gasoil, Brent crude, soybean and cotton.
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Invesco Optimum Yield Diversified Commodity Stratgy No K-1 ETF (PDBC): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
