Studies indicate that investors with high equity allocations should have up to 25 percent of their portfolio in hard assets while a 10 percent minimum is appropriate for moderate-risk investors. Such allocations can be expected to produce slightly higher returns with slightly lower risks, compared with portfolios that don’t hold these asset classes.
Hard assets frequently have been insulated from market crashes and economic shocks. Hard assets were largely immune from the 1987 stock market crash, for example, and they did very well in the economic upheavals of 1973 and 1979.
One way to invest in hard assets is to buy shares of a natural resources mutual fund. Well-regarded funds include:
T. Rowe Price New Era Fund, which holds companies active in precious metals and energy along with other hard assets such as timber.
Oppenheimer Real Asset Fund, which tracks the Goldman Sachs Commodity Index. It tends to rise or fall with oil prices.
PIMCO Commodity Real Return Strategy Funds, which tracks the Dow Jones-AIG Commodity Index. This fund is less energy-weighted, with more exposure to other commodities.
RS Global Natural Resources Fund, which goes beyond energy into food and agriculture, while also providing substantial international exposure.
