Public Equities

Keeping it “Real”—The Case for Natural Resource Equities

February 2026 – 9 min read

Natural resource equities can provide inflation protection and portfolio diversification, making them a potentially compelling investment option in environments characterized by elevated inflation, heightened geopolitical risk, and increasing energy demand.

Executive Summary

Natural resource equities have historically provided an effective inflation hedge, while also offering diversification benefits within a broader equity portfolio. Over the last 20+ years, natural resource equities have protected against inflation better than many other fixed income and equity asset classes. Further, as a ‘real asset’, commodities can continue to provide inflation protection even when global government debt levels are elevated, and hedge against the spectre of rising fiscal deficits. Currently, short-term inflation expectations remain elevated, evident from the recent moves in U.S. Treasury yields and amplified by President Donald Trump’s expansionary fiscal policy, U.S. import tariffs, and immigration policies. Longer term, the next phase of global growth will likely be energy intensive, driven by rising power demand from artificial intelligence and data centers. This increase will lead to a structural demand for key materials including copper and aluminum, at time when investment in new supply is insufficient.

When assessing the most effective way to allocate to this asset class, it is worth noting that natural resource equities have provided a much higher return than commodity futures over time, benefiting from the underlying cash flows of the companies and avoiding the significant costs of holding the underlying commodities. Natural resource equities can also serve as an effective diversifier for global equity portfolios given the high concentration risk of the broader global equity market and the dominance of a few mega-cap technology stocks—which has led to pools of capital globally exhibiting high exposure to sector and company risks.

We believe the most effective way to access natural resource equities is through investing in a diversified resources equity portfolio.

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Headshot of James Govan smiling at the camera.

James Govan, CFA

Investment Manager, Global Resources
Headshot of Phillip Nicholass smiling at the camera.

Philip Nicholass, CFA, CAIA

Client Portfolio Manager, Equities

Important Information

The document is for informational purposes only and is not an offer or solicitation for the purchase or sale of any financial instrument or service. The material herein was prepared without any consideration of the investment objectives, financial situation or particular needs of anyone who may receive it. This document is not, and must not be treated as, investment advice, investment recommendations, or investment research.

In making an investment decision, prospective investors must rely on their own examination of the merits and risks involved and before making any investment decision, it is recommended that prospective investors seek independent investment, legal, tax, accounting or other professional advice as appropriate.

Unless otherwise mentioned, the views contained in this document are those of Barings. These views are made in good faith in relation to the facts known at the time of preparation and are subject to change without notice. Parts of this document may be based on information received from sources we believe to be reliable. Although every effort is taken to ensure that the information contained in this document is accurate, Barings makes no representation or warranty, express or implied, regarding the accuracy, completeness or adequacy of the information.

Forecasts in this document reflect Barings’ market views as of the preparation date and may change without notice. Projections are not guarantees of future performance. The value of investments and any income may fluctuate and are not guaranteed by Barings or any other party. Examples, portfolio compositions, and investment results shown are for illustrative purposes only and do not predict future outcomes. Actual investments may differ significantly in size, composition, and risk. No assurance is given that any investment will be profitable or avoid losses. Currency exchange rate fluctuations may impact investment value.

Investments involve risks, including potential loss of principal. Past performance is not indicative of future results. Investors should not only base on this document alone to make investment decision.

This document is issued by Baring Asset Management (Asia) Limited. It has not been reviewed by the Securities and Futures Commission of Hong Kong.

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