Should investors bet on metal funds in 2026 amid geopolitical crisis, rising commodity cycles?

Metal and commodity-focused mutual funds are back in focus in 2026 as rising infrastructure spending, global supply constraints, energy transition demand, and industrial recovery continue to support commodity prices worldwide. From steel and aluminium to energy and mining stocks, commodity-linked sectors have seen renewed investor interest amid expectations of a prolonged global commodity upcycle.

Against this backdrop, investors are increasingly evaluating whether metal and commodity mutual funds can offer attractive return potential over the next few years. According to an Equitymaster analysis, funds focused on metals, mining, energy, and natural resources could benefit from favourable macroeconomic trends, although the category remains highly cyclical and volatile.

Why choose commodity funds

Analysts say metal and commodity funds could continue benefiting if global infrastructure spending, industrial demand, and energy-transition investments remain strong. China’s policy measures, global manufacturing recovery, and rising defence and infrastructure spending could further support commodity prices.

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However, experts caution that commodity funds are inherently cyclical and can witness sharp volatility during economic slowdowns or commodity price corrections. These funds are generally better suited for investors with higher risk appetite and a long-term investment horizon.

For investors considering the theme, ICICI Prudential Commodities Fund appears relatively balanced because of its diversified exposure, while DSP Natural Resources & New Energy Fund offers an additional clean-energy angle. SBI Comma Fund provides broader commodity-cycle exposure but has shown comparatively weaker long-term consistency.

Overall, analysts suggest metal funds may work better as tactical or satellite allocations rather than core portfolio holdings in 2026.

Metal and commodity mutual funds

Commodity mutual funds invest in companies linked to metals, mining, energy, and natural resources, offering exposure to global commodity cycles and industrial growth trends. These sectoral funds can benefit during rising commodity prices but are generally considered high-risk and cyclical investments.

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Among the notable performers in the segment are DSP Natural Resources & New Energy Fund, ICICI Prudential Commodities Fund, and SBI Comma Fund, each offering a different approach to commodity investing.

ICICI Prudential Commodities Fund

The ICICI Prudential Commodities Fund has emerged as one of the more diversified commodity-oriented schemes in the market. Unlike pure metal-focused funds, it spreads investments across metals & mining, chemicals, construction materials, and capital goods sectors.

Metals and mining account for nearly 45% of the portfolio, while chemicals contribute over 25%. Major holdings include Jindal Steel, JSW Steel, Hindalco Industries, and Jindal Stainless. The fund also holds limited exposure to international commodity companies.

The fund delivered 22.53% returns over one year and has consistently maintained strong long-term performance. Since inception, it has generated annualised returns of 26.74%, outperforming its benchmark over the long term. Analysts suggest the diversified approach may help reduce concentration risks often associated with sectoral funds.

DSP Natural Resources & New Energy Fund

The DSP Natural Resources & New Energy Fund combines traditional commodity exposure with renewable energy and energy-transition themes. The portfolio is heavily tilted toward energy and basic materials, which together account for nearly 90% of its allocation.

The fund invests in companies linked to oil & gas, mining, steel, and alternative energy technologies. Key holdings include Tata Steel, Jindal Steel, ONGC, and Oil India, along with exposure to global energy-focused investments.

The scheme generated returns of 33.03% over one year, although it underperformed its benchmark over shorter-term periods. However, its long-term track record remains strong, with substantial wealth creation since inception. Analysts believe the fund may appeal to investors looking to combine commodity exposure with the global clean-energy transition theme.

SBI Comma Fund

The SBI Comma Fund follows a broader commodity-cycle strategy with allocations across metals, oil & gas, power, and construction materials. The fund has exposure across large-cap, mid-cap, and small-cap companies.

Its top holdings include Tata Steel, ONGC, Reliance Industries, and Oil India. Metals & mining and oil & gas sectors together form more than half of the overall portfolio.

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While the fund has delivered competitive one-year and three-year returns, its longer-term performance has remained relatively weaker compared to its benchmark. Over five years, a Rs 10,000 investment would have grown to around Rs 19,720 versus over Rs 23,000 in the benchmark.

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