Best performance with commodites and and EM

The classic combination of large-cap developed-market equities and fixed income does not perform as well as a combination that holds commodities and EM equities. Call it the power of diversification, or the problem of complacency, with a simple 60/40 mix. The continued energy shock from war, coupled with improved fiscal responsibility in EM countries, suggests that holding what were once considered the riskiest assets is now a better strategy. Better value outside the US in a rising rate environment calls for diversification.