Jeremy Grantham from GMO has written extensively about the long-term prospects for natural resources, but there are advantages to commodity investing beyond potential commodity price appreciation, including diversification and inflation protection.
Resource equities are a great way to gain commodity exposure, while also accessing the equity risk premium.
Given their somewhat hybrid nature, with one foot in the equity market and the other foot in the commodity market, resource equities display some unusual characteristics; over various timeframes, resource equities may move more with equities or more with commodities and can look more or less risky than the broad market.
Perhaps due to their quirky nature, resource equities are generally unloved and possibly misunderstood. However, we believe that resource equities present a compelling investment opportunity, both strategically and tactically, and that long-term investors could benefit from larger allocations to these assets.
Download and read the full White Paper by Lucas White and Jeremy Grantham here.
