From 1986 to 2010 Duquesne Capital Management averaged an annual return of 30%, dramatically outperforming the market and the hedge fund industry. Stanley Druckenmiller, who managed the Duquesne Capital Management portfolio (now a family office) attributes much of his success to his flexibility and willingness to trade across asset classes.

In a recent interview, Druckenmiller said, “The Fact that I can travel around five or six asset classes does a couple of things: 1.) It can point you in the right direction, and if you really believe something, you can make big gains there. 2.) As a macro investor, currencies and bonds trade 24 hours a day, are very liquid, and you can change your mind, which I have had to do a lot in my career because I’ve been wrong a lot in my career. 3.) (Trading across asset classes) gives you discipline, not to be playing around in an area that is dangerous.” Druckenmiller continued, “If you are an equity-only investor it’s your job to be in equities. If you have the latitude to say I’m just not going to play, it’s too complicated, you don’t play in them.”

As I mentioned in my recent piece,“Cracking the Code: 5 Reasons a Choppy Market Looms,” the smooth sailing bull market that investors have enjoyed in recent months may get more challenging to navigate due to factors such as geopolitical escalations, muddled Fed policy, and historical seasonality trend.

Image Source: Stock Traders Almanac

However, as Druckenmiller teaches, flexibility can be a huge advantage. With the advent of ETFs, investors do not need futures-enabled accounts to participate. Below are three non-equity markets investors should consider now:

Metals

Metals are back in play as inflation remains stubborn. Year-to-date, the iShares Silver Trust ((SLV Quick QuoteSLV - Free Report) ) and the SPDR Gold Shares ETF ((GLD Quick QuoteGLD - Free Report) ) are each up double digits and are outperforming the S&P 500 Index. GLD broke out to fresh all-time highs earlier this year, and SLV is on the brink of breaking out of a base dating back to 2020.

Image Source: Zacks Investment Research

Natural Gas

The Natural Gas ETF ((UNG Quick QuoteUNG - Free Report) ) cleared its -50-day moving average for the first time since January – a sign of a possible trend change. Fundamental catalysts include heavy short interest, declining output, and higher demand forecasts. 

Image Source: TradingView

Oil

The United States Oil Fund ETF ((USO Quick QuoteUSO - Free Report) ) is retracing after a solid move to start the year. However, geopolitical escalations and a dwindling U.S. Strategic Petroleum Reserve are just two factors that will likely put a floor under oil.

Image Source: TradingView

Bottom Line

When equity markets become complicated, other asset classes can provide investors with a refuge Commodity ETFs currently present favorable reward-to-risk opportunities.