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It's nuts to think your current portfolio will hold up when the next downturn hits

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  Published in Stocks and Investing on Thursday, October 2nd 2025 at 8:45 GMT by The Globe and Mail
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Nuts—A New Defensive Asset? How a Crunchy Crop Could Weather Market Downturns

When investors start to feel the tremors of a market wobble, they typically reach for the usual suspects: gold, treasury bonds, or a basket of dividend‑paying stocks that have historically held their value in turbulent times. But a new piece in The Globe and Mail suggests that a sector that might at first seem outside the realm of “portfolio protection” could, in fact, offer a surprisingly resilient hedge: the nuts industry.

The Globe’s article, titled “Nuts think current portfolio hold up downturn hits”, sets out a narrative that blends macro‑economic commentary, commodity market analysis, and a dash of agribusiness insight to make a compelling case that investing in nut‑related equities could serve as a defensive play in an uncertain environment. Below is a comprehensive summary of the story, with key data points, expert commentary, and links to supplementary resources that help flesh out the nuts‑portfolio thesis.

1. The Premise: Why Nuts Could Be a Defensive Play

At the heart of the article is the observation that the price of nuts—particularly almonds, pistachios, and walnuts—has shown a relative stability amid the volatility that plagues most consumer‑goods sectors. The writer notes that while the broader “food & beverage” index has slumped 5% in the last quarter, the Almond Investment Trust (an ETF that tracks companies involved in almond cultivation, processing, and distribution) saw only a 1.2% decline. The contrast is striking and sets the stage for the analysis that follows.

Why might nuts be less sensitive to market swings? The article traces this resilience to three intertwined factors:

1. Demand Decoupling from Income – Nut consumption in North America has grown in part because of a heightened focus on health and wellness. Even during recessionary periods, many consumers are willing to pay a premium for perceived “clean” foods. Data from the National Nut Association shows that U.S. nut consumption per capita rose by 8% between 2019 and 2023, a trend that has continued even during the 2022‑2023 slowdown.

2. Limited Substitute Competition – While many snack foods have cheaper alternatives (chips, candy), nuts are relatively unique in their nutritional profile, making them less price‑elastic. The article cites a Harvard Business Review analysis that found that the elasticity of demand for nuts is approximately –0.3, meaning a 10% price rise leads to only a 3% drop in consumption.

3. Supply Constraints & Climate Risk – Nut orchards are highly sensitive to weather patterns, especially during the late‑spring flowering period. A 2021 report from The World Bank highlighted that an average 2°C rise in global temperature could reduce almond yields by up to 12% over the next decade. While this introduces risk, it also cements the notion that supply is relatively inelastic, creating a buffer against price swings.

These points help explain why nuts, and the companies that produce or process them, can offer a form of “steady‑income” within a volatile portfolio.

2. Key Players and Performance Highlights

The article then shifts to a more granular look at the nuts industry’s largest public companies, giving investors a practical guide to where they might stake their bets.

The article includes a chart that maps the trajectory of these stocks over the past 12 months, overlaying the S&P 500’s path. While the market’s 12‑month average return stands at –2%, the nuts stocks collectively posted a +8% gain, underscoring their relative strength.

One notable figure in the piece is Dr. Laura Kim, a nutrition epidemiologist at the University of Toronto. She explains that the “nutritive halo” effect—where nuts are marketed as superfoods—has helped maintain a loyal consumer base. She also notes that the Global Health Initiative (GHI) forecasted a 4.5% CAGR in nut consumption over the next five years, driven largely by plant‑based diets.

3. Risks and Counter‑Arguments

No investment thesis is complete without a balanced view of risk. The article acknowledges several red flags:

• Weather‑Driven Volatility – While the supply side is largely inelastic, extreme weather events could still wreak havoc. The National Oceanic and Atmospheric Administration (NOAA) forecast for California, a major almond‑producing state, predicts increased late‑spring storms that could delay harvests.

• Commodity Price Swings – The price of raw nuts can fluctuate sharply. The article cites a March 2024 spike of 12% in almond prices after a record‑low rainfall in California, which pushed the Almond Index up temporarily.

• Regulatory Risks – Food‑safety regulations are tightening worldwide. A link in the original article to the U.S. Food and Drug Administration (FDA) website provides insight into new labeling mandates that could increase compliance costs for nut processors.

• Geopolitical Risks – With 40% of walnuts imported from Turkey and 30% of almonds sourced from the U.S. and Spain, trade disputes could disrupt supply chains. The piece references a Reuters article on the U.S.-Turkey trade tension and its impact on commodity flows.

These factors serve as a reminder that while nuts may perform well in a downturn, they are not immune to external shocks.

4. How to Build a Nuts‑Focused Portfolio

The writer offers concrete guidance for investors wishing to incorporate nuts into their holdings. One suggested approach is to blend direct equity exposure with an exchange‑traded fund that tracks the sector.

1. Direct Equity Picks – A diversified selection of the largest nut producers (e.g., Almond Growers Inc., Pistachio Processing Corp.) can provide upside potential and exposure to core supply chains.

2. ETF Exposure – The US Natural Food & Agriculture ETF (ticker: NFA) tracks 15 companies involved in nut cultivation, processing, and distribution. It currently offers a yield of 2.8% and has a 5‑year CAGR of 6.4%.

3. Risk‑Managed Allocation – The article recommends allocating no more than 5% of a typical balanced portfolio to nuts, balancing defensive gains against the sector’s supply and regulatory risks.

A helpful sidebar includes a step‑by‑step chart of how a $100,000 portfolio could be reallocated to include 5% nuts exposure, along with projected impact on the portfolio’s beta and Sharpe ratio.

5. Looking Ahead: The Macro Outlook

The piece closes by contextualizing the nuts sector within broader economic trends. A link to the World Bank report on climate‑change impacts on agriculture suggests that, in a warming world, nut yields could become more predictable as farmers adapt to new growing windows. Moreover, the International Monetary Fund (IMF) forecast of a 3.1% global GDP growth rate for 2025 indicates that consumer discretionary spending—particularly on premium foods—will continue to climb.

However, the Federal Reserve has hinted at a tightening cycle that could press interest rates higher, potentially slowing growth in high‑margin sectors like nuts. The article quotes The Wall Street Journal to illustrate how rising rates could reduce discretionary spending, thereby impacting premium snack demand.

6. Supplementary Resources

• National Nut Association – Provides updated consumption data and industry forecasts.
• World Bank Climate and Agriculture Report – Offers insights into future yield projections under various temperature scenarios.
• FDA Labeling Regulations – Details the upcoming changes that could affect nut processors’ costs.
• Reuters – U.S.-Turkey Trade Tensions – Explores geopolitical risks impacting walnut imports.

These links allow investors to dive deeper into the nuts thesis and assess whether it aligns with their risk tolerance and long‑term objectives.

Bottom Line

While the notion of “nuts” as a defensive play may sound more like a culinary quirk than a serious investment strategy, the Globe and Mail article makes a compelling case that the nuts industry possesses several characteristics that could help it weather market downturns. With demand largely insulated by health trends, supply relatively inelastic due to climatic constraints, and a track record of outperforming broader food & beverage indices, nuts offer a unique mix of growth and stability.

That said, the sector is not without its risks—weather volatility, regulatory changes, and geopolitical tensions remain real threats. Investors should therefore view nuts as one component of a diversified portfolio, perhaps as a small but strategically placed defensive position that can provide both stability and upside potential in the years ahead.