Bank of America says this corner of the market is the best 'run-it-hot' trade for investors in 2026

Core Viewpoint - Commodities are expected to be the leading investment opportunity in 2026, driven by strong economic growth, fiscal and monetary stimulus, and potentially higher inflation [1][2][7] Group 1: Investment Performance - Commodities are projected to deliver strong returns in 2025, particularly due to the demand from the AI data center boom [3] - The Vanguard Commodity Strategy Fund has increased by 17% year-to-date, outperforming the S&P 500 [3] - The industrial sector, which is heavily weighted in commodities, has also risen by 17% since January, while utilities and energy sectors have increased by 15% and 7%, respectively [3] Group 2: Economic Factors Supporting Commodities - Trump's economic policies are anticipated to further stimulate economic growth, benefiting commodities investments [4] - The growing appeal of commodities over traditional safe-haven investments like bonds is noted, as excess fiscal spending has allowed commodities to outperform [4] - Globalization is becoming more fragmented due to geopolitical conflicts and supply chain issues, which is expected to boost demand for commodities [5] Group 3: Inflation Impact - Higher inflation expectations are likely to drive up prices for certain commodities, such as gold, which has risen by 60% this year and is on track for its best performance since the 1970s [6]