Structural under-investment in mining underpins 70 per cent return for Gorozen’s maiden Australian fund

For advisers, the case for commodities is becoming less about short-term price moves and more about structural scarcity. After a decade in which many parts of the natural resources sector were starved of capital, supply is no longer as flexible as markets may assume. That supply-demand mismatch is captured in the one-year returns of the Goehring & Rozencwajg Australian unit trust, which celebrates its one-year anniversary with a return of 70.7 per cent (as of 28^th April 2026).

Adam Rozencwajg (pictured, left, with partner Leigh Goehring), managing partner at New York-based Goehring & Rozencwajg Associates, says this capital cycle is the key to understanding the opportunity. “The biggest driver for commodity prices going forward is the lack of investment over the past 10 years,” he says.

This is a useful framing for advisers. Commodity markets often look volatile at the surface, but the deeper story is supply discipline. Mines take years to approve and build; oil and gas fields decline naturally. New production cannot appear just because prices move higher.

When supply has been underfunded and demand keeps rising, markets can move from surplus to deficit quickly. That is when commodities can become powerful portfolio diversifiers.

Inflation protection with a structural tailwind

The inflation argument is central to the current resources case. Higher commodity prices do not just reflect inflation: they can also drive it, particularly when energy, materials and food costs are involved.

Rozencwajg believes inflation is likely to remain a recurring issue. “We believe inflation will continue to be a concern throughout the decade, just like in the 1970s,” he says.

For advisers, that makes natural resources relevant again. The traditional 60/40 portfolio has been tested by periods where bonds and equities fell together. A measured exposure to commodities can add a different return driver, one linked more directly to real assets and physical scarcity. “Commodities historically have been a good way to protect against bouts of inflation,” says Rozencwajg.

This does not mean commodities should replace equities or bonds; it means they can do a different job. They can give client portfolios exposure to rising replacement costs, constrained supply and currency debasement risk.

Rozencwajg says investors should consider natural resources “as a source of uncorrelated return and a hedge against inflation or currency devaluation.” That is the cleaner adviser conversation. The allocation is not about chasing the latest oil price move; it is about preparing portfolios for a world in which inflation may be more persistent than the last cycle suggested.

Finding value before consensus returns

The strongest resources opportunities often appear when investor sentiment is weak. That can make the timing uncomfortable, but it is also where valuation discipline becomes important.

“We have always felt that the best time to find value is when investors are pessimistic and commodities are depressed,” Rozencwajg says.

His firm’s approach combines top-down commodity analysis with bottom-up stock selection. It first looks for sectors where capital has been withdrawn, prices are depressed and supply risks are building. It then seeks listed equities that provide direct exposure to those themes.

That distinction matters for advisers. A specialist resources fund is not the same as buying broad-market equity exposure with a few large miners attached. Rozencwajg says the firm tends to avoid the largest integrated or diversified companies when they do not provide the direct exposure it wants.

The capital cycle is turning

The portfolio role is therefore specific. A natural resources allocation can give clients access to commodity price upside, earnings leverage and real asset sensitivity. It may be especially useful for investors who understand that the opportunity depends on the cycle, not quarterly noise.

The current backdrop gives advisers a strong framework. Underinvestment has reduced supply flexibility. Demand remains robust. Inflation risk has not vanished. Geopolitical events may act as catalysts, but the structural driver is the capital that was not spent.

For advisers building portfolios for the next decade, that is the point. Commodities are not just a tactical trade. They may be one of the more direct ways to hedge a world where demand keeps growing and supply struggles to catch up.