How Commodities Benefit from the AI Boom
At a high level, commodities have been an important portfolio diversifier. If you look at a basket-based, futures-oriented strategy like SDCI, what you've seen historically is it has low to negative correlation to fixed income. It has low correlation to equity markets.
CCNR takes the basket of global commodities and natural resources-oriented equities. So, not just companies here in the United States, but companies around the globe, and mixes and matches exposures within that bucket to provide a diversified portfolio of companies that stand to benefit from increasing commodities demand for things like copper, which we talked about. They even have exposure to some of the raw materials companies providing the inputs to the development and manufacturing of solar panels and to wind.
In many ways, what CCNR does is it provides you with a big basket of 300 or so stocks of global companies operating in the natural resources segment, run by a team with a great track record of doing so. But importantly, these are companies that a lot of people don't typically own through their core equity allocation. If you think about the S&P 500, materials companies are less than 5% of the S&P 500 by weight.
If you look at a global equity-based benchmark, things like materials and even energy equities aren't a big slice of that global diversified portfolio. And so going out and seeking these companies who stand to benefit from some of these mega trends in terms of demand for the raw materials going into EVs and batteries, demand for the inputs to improving and modernizing the grid, demand for the commodities that we live and breathe and require in our day-to-day lives.
Those are the companies that are positioned to benefit from some of these mega trends, maybe in an incremental or maybe even in an adjacent way. But importantly, what CCNR does is it gives you exposure to a management team who has real expertise and lives and breathes the commodities landscape as it relates to the equities portion of that portfolio.
The relative performance to other portfolios that target this segment of the market either domestically or globally has been strong as well. And so we view it as a portfolio diversifier in a market where we're at record highs and investors are starting to look for opportunities to maybe ratchet down the risk or importantly to turn down the dial on some of the overweights they have to the sectors that have been driving the market higher.
