Schwab's Sonders: Neutral on Equities, Favor Commodities, but Not for Everyone

According to chief investment strategist Liz Ann Sonders, Charles Schwab takes a neutral view on equities and prefers commodities to stocks and bonds.

In a recent interview, Sonders pushed back against what she called "cookie-cutter" portfolio advice. She argued that portfolio allocation depends on an individual's time horizon, risk tolerance, income requirements, and overall objectives.

No Single Portfolio for Everyone

"It actually drives me a little crazy when people give a cookie-cutter answer to that," Sonders said. "There's no one asset allocation that makes sense right now."

Sonders noted that Schwab manages $13.4 trillion in client assets, and she cited that scale as evidence that no single allocation works for everyone.

Her comments came in response to a question about the traditional 60/40 portfolio, which consists of 60% stocks and 40% bonds. Some other strategists have suggested allocating a larger portion to commodities in place of that split.

Commodities Favored Over Bonds

According to Sonders, Schwab has a less positive view on fixed income and a more positive view on commodities. This approach mirrors a wider move away from the traditional 60/40 allocation.

"We're neutral on equities, which is not a bearish position," she added. This neutral stance stems from Schwab's long-term strategic allocation, not from a recommendation to sell equities.

In August, gold-backed funds attracted $18 billion, marking the second-largest monthly inflow on record and pushing total holdings to a new peak.

The data originates from the World Gold Council, an industry organization that monitors global gold demand, as referenced in a report on the surge in gold ETF inflows.

Some other strategists have proposed a 60/20/20 allocation, with one-fifth of the portfolio in commodities. Sonders did not recommend any specific ratio.

She stated that the appropriate percentages vary based on individual investors' objectives, time horizon, and income requirements. The interviewer noted that age and investor profile are equally important.

The discussion about whether stocks and bonds still provide effective diversification remains unresolved. The success of Schwab's shift toward commodities will likely hinge on the current cycle for gold and other real assets, a development that will continue to unfold in the coming months.