Commodities have long been out of favor with investors, but have recently enjoyed a good run, outperforming broad domestic equity indices for the first time in many years. For example, the Bloomberg Commodities Index1 has returned 32.74% vs. -13.89% for the Russell 3000 Index2 (as of May 31, 2022). Increased cross-commodity demand from China, significant supply-side discipline in the oil sector, and governmental commitments to maintain fiscal economic support have all been important factors.
Whether we’re in the early stages of another super cycle in commodity prices and returns has become a key debate. We see several structural similarities between the early 2020s and the early 2000s, the last time commodities began a long and powerful ascent to record prices.
1 Bloomberg Commodity Index comprise families of investable benchmarks and systematic strategies designed to provide exposure to a broad universe of physical commodities, with no single commodity or category dominating the index.
2 Russell 3000 Index measures the performance of the 3,000 largest US companies based on total market capitalization, which represents approximately 98% of the investable US equity market.
3 Source: Bloomberg, March 2021.
Important Risks for Hartford Schroders Commodity Strategy ETF: The Fund is new and has a limited operating history. Investing involves risk, including the possible loss of principal. The net asset value (NAV) of the Fund's shares may fluctuate due to changes in the market value of the Fund's holdings. The Fund's share price may fluctuate due to changes in the relative supply of and demand for the shares on an exchange. The Fund is actively managed and does not seek to replicate the performance of a specified index. • Investments in the commodities market may increase the Fund's liquidity risk, volatility and risk of loss if adverse developments occur. • Investments linked to prices of commodities may be considered speculative. Significant exposure to commodities may subject the Fund to greater volatility than traditional investments. The value of such instruments may be volatile and fluctuate widely based on a variety of factors. • Derivatives are generally more volatile and sensitive to changes in market or economic conditions than other securities; their risks include currency, leverage, liquidity, index, pricing, regulatory and counterparty risk. • By investing in a Cayman Subsidiary, the Fund is indirectly exposed to the risks associated with a non-US subsidiary and its investments. • To the extent the Fund focuses on one or more sectors, the Fund may be subject to increased volatility and risk of loss if adverse developments occur. l In certain instances, unlike other ETFs, the Fund may effect creations and redemptions partly or wholly for cash, rather than in-kind, which may make the Fund less tax-efficient and incur more fees than an ETF that primarily or wholly effects creations and redemptions in-kind. • Integration of environmental, social, and/or governance (ESG) factors into the investment process may not work as intended.
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The views expressed herein are those of Schroders Investment Management (Schroders), are for informational purposes only, and are subject to change based on prevailing market, economic, and other conditions. The views expressed may not reflect the opinions of Hartford Funds or any other sub-adviser to our funds. The opinions stated in this document include some forecasted views. Schroders believes that they are basing their expectations and beliefs on reasonable assumptions within the bounds of what they currently know. The views and information discussed should not be construed as research, a recommendation, or investment advice, nor should they be considered an offer or solicitation to buy or sell any security. This information is current at the time of writing and may not be reproduced or distributed in whole or in part, for any purpose, without the express written consent of Schroders or Hartford Funds.
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