Real assets are a common theme among inflation-fighting strategies, and commodities are another option. Any kind of raw material from steel to soybeans to cotton is considered a commodity, and in an inflationary environment, these goods naturally see their values rise, too.
Of course, trading commodities is a sophisticated game that involves a lot of research. Consider that corn prices just touched a three-year low thanks to a combination of a bumper crop boosting production, less demand for ethanol amid cheap gasoline prices and other factors. Following and anticipating trends in commodities can be complicated and difficult, and even if you pull that off, actually trading commodity futures via a brokerage account can result in high fees.
An alternative, then, is to consider asset-backed funds that are based on commodity prices but trade like typical stocks and ETFs.
There’s the United States Oil Fund (USO), which is benchmarked to commodity futures relating to crude oil. There’s the Teucrium Corn Fund (CORN) and the Teucrium Sugar Fund (CANE), which both invest in commodity pools relating to the underlying crops. And with each passing day, more and more commodity-backed ETFs are finding their way to the market.
But keep in mind that while inflation may lift prices longer-term, prices of these raw commodities can be quite volatile in the interim, and factors beyond inflation can affect your investment.