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Hedge inflation with commodity names that won’t crash when prices pull back – Foord

Many copper bobbins, warehouse copper pipes.

Foord portfolio manager Brian Arcese advised investors to look to commodity names to hedge against inflation but warned against putting money into assets that will drop as soon as commodity prices see a correction.

“We are holding commodity-oriented names, but ones that aren’t necessarily at the knife’s edge that will correct in a material way if commodity prices come off,” the portfolio manager and equity analyst at Foord Asset Management told CNBC.

As part of this strategy, Arcese suggested investing in “the highest quality miners.” Specifically, he pointed to Freeport-McMoRan (NYSE:FCX), which he highlighted as “one of the lowest-cost copper producers globally.”

Arcese noted that commodity prices “in certain pockets have probably gotten ahead of themselves.” As a result, the portfolio manager revealed that Foord has begun to trim some of its commodity-focused investments.

“But we’re still very comfortable investing in many of these names for the long term,” he said.

In terms of other individual recommendations, Arcese mentioned FMC Corp. (FMC), Nutrien (NTR), Pan American Silver (PAAS), Wheaton Precious Metals (WPM) and Livent (LTHM).

Looking at the overall economic situation, Arcese predicted that inflation will moderate from its current levels. However, he sees it remaining “meaningfully above where it’s been for the past 15 years.”

For more on the current state of inflation, see why former PIMCO chief Mohamed El-Erian thinks the Federal Reserve needs to keep raising rates past this summer.

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