iShares S&P GSCI Commodity-Indexed Trust

GSG

Market cap $978M

Gold — the commodity most investors associate with the category — doesn't currently appear at all in one broad commodities fund's portfolio. Refined fuel contracts top the lineup instead.

The outlook for long-term total return for the Global Market Index (GMI) edged up again in June, touching the highest level in recent history. Despite the recent rise, the expected performance remains well below GMI's realized return over the trailing ten-year window.

AI, Alternative Energy and Commodity stocks are all leading this market as a confluence of economic developments drive growth and constrain supply.

March winners were clear -- Shipping, Energy, Commodities & Volatility ETFs surged as war risks, supply shocks, and market swings drove big gains.

Inflation fears resurface as oil surges and volatility spikes, pushing investors toward commodity, quality and value ETFs to navigate rising risks.

U.S.-Iran tensions are shaking global markets. These 5 low-beta commodity ETFs are surging as oil risks and safe-haven demand drive commodity prices higher.

U.S. stocks continued their momentum with a solid +2.30% return, while world stocks pulled back -1.12% after their strong June performance. The commodity surge pushed this asset class to +4.73% year-to-date, representing a remarkable turnaround from the challenging April decline.

The commodities composite rose 12.50% in 2024, driven by a 58.14% gain in soft commodities, despite a strong dollar and higher interest rates. iShares S&P GSCI Commodity-Indexed Trust ETF, a diversified commodity ETF with significant energy exposure, increased 8.52% in 2024, outperforming the energy sector but underperforming the broader commodity composite. The case for higher commodity prices in 2025 includes persistent inflation, a growing global population, and a potential economic rebound in China, despite risks like a strong dollar and geopolitical turmoil.

GSG's high liquidity and broad commodity access make it a solid portfolio diversifier, but energy sector risks warrant caution. Positive catalysts include bullish natural gas fundamentals, gold's inflation hedge potential, and the $500 billion Stargate AI infrastructure initiative driving demand for industrial metals. Livestock sector weight increases, supported by tight cattle supplies and strong consumer demand, further bolster GSG's diversified commodity exposure.

In this article, we assess the potential for commodities to outperform amid growing anticipation that the Federal Reserve (Fed) will begin to unwind monetary policy in September. We argue that commodities as a whole have never been this cheap compared to equities since the 1970s, and that we could be entering into a new commodity supercycle. For investors looking to build a more selective and concentrated exposure to commodities, we warn that this could be a risky endeavour. However, being selective is absolutely critical for alpha.