One opportunity I recommend in our retirement portfolio is in global mining companies. Their stocks tumbled this year and are trading at low valuations, observes Bob Carlson, editor of Retirement Watch.
Investors are concerned the rally in commodities and mining is over. I disagree. I expect global growth to continue. That will increase demand for industrial commodities. In addition, the balance sheets and cash flow of the major miners are in the best shape in quite some time.
The best way to invest is through iShares MSCI Global Metals and Mining Producers (PICK). The ETF has a 2.86% yield. Mining stocks tumbled this year. PICK is down 6.96% over the last four weeks and 5.95% over three months. But it is up 14.90% for the year to date and 54.85% over 12 months.
The main concern about the mining companies is that China is deliberately slowing growth this year, and China is a big commodity buyer. I think that’s already factored into the mining company stock prices. Even at the recent lower prices for some of the industrial commodities, the major mining companies are very profitable.
We also own a basket of inflation hedges through DWS RREEF Real Assets (AAASX). In the last four weeks, the fund benefited from rising commodity prices but was hurt by declining prices for gold and REITs.
The fund tactically adjusts its allocation to those four different inflation hedges in response to changes in the outlook for inflation and economic growth. Within those broad categories, it also tactically changes its holdings of the individual commodities, REITs and other assets.
The fund has had an exemplary long-term record of making these changes. AAASX was down in the last four weeks, but it is up 17.10% for the year to date and 25.96% over 12 months.
