Article

Applied philosophy: Are commodities too optimistic?

May 29, 2025
Andras Vig
András Vig
Multi-Asset Strategist
World connection concept

Welcome to Applied Philosophy, a regular piece on global equity markets from András Vig and the Global Market Strategy Office. In the piece, they take an in-depth look at a topic of economic or market significance, before assessing how its evolution could inform or impact their model asset allocation.  

Most assets welcomed signs of a thawing in trade relations between the US and the rest of the world. Commodities, however, have given us mixed signals year-to-date with energy commodities remaining near lows due to expectations of increasing supply, while industrial metals recovered. Gold seems to be the closest to pricing in a recession in the US. Although the probability of that happening in the near term seems lower than in early-April, risks remain to our Overweight allocation to cyclical commodities.

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FAQs

Asset allocation is the process of dividing an investment portfolio among different asset classes, such as stocks, bonds and cash and so on. Bonds generally tend to be ‘safer’ investments than stocks and are, for example, seen as more defensive. Assets are allocated based on economic and monetary expectations.  

Model portfolios are a diversified group of assets. They are designed to achieve an expected return with the corresponding risk. Model portfolios are usually extensively researched and, in most cases, have a combination of managed investments.

Spreading the risk and number of potential opportunities across various asset classes, such as equities, fixed income, and commodities. The aim of diversification is to reduce the overall risk of the portfolio.

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