Commodity mutual funds provide an opportunity to diversify your investment portfolio beyond stock and bonds. Basically, commodities are things that are grown or occur naturally, such as grains, crude oil, cotton, sugar, cattle and wheat. There are over 100 commodities traded on the market today.

A strong global demand for resources, including iron ore and copper as well as oil, coal and precious metals often mean good news for such funds. Commonly mentioned advantages of commodity mutual funds are:

Commodities have had a huge run, but relatively short in length of time compared to historical commodity bull markets. And in terms of oil, many believe that the world has reached it’s peak supply production. Demand is increasing at growing rates. The economics of this are going to push oil prices even higher.

In fact, commodities are often viewed as a hedge against inflation. Meaning the prices of commodities tend to rise in step with inflation. This movement trends to run counter to stock prices an attribute that makes commodity mutual funds appealing to investors. Just like any other mutual fund, commodity mutual funds can include a mix of different commodities.

However, the commodities market can be volatile and many investor advisors suggest having no more than 5% of your portfolio in commodities. You should look at commodities as a long-term fundamental play instead of a get-rich-quick approach.

Sponsored Links

Related Resources

Wikipedia: Commodity Mutual Funds
Ehow.com: Commodity Mutual Funds
Financial Web: Commodity Mutual Funds

Related Articles

Sector Mutual Funds
Top 10 Mutual Funds
High Yield Mutual Funds

News

Google News: Commodity Mutual Funds

Videos

YouTube: Commodity Mutual Funds

Blogs

Mfactivity: Commodity Mutual Funds

Books

Amazon.com: Commodity Mutual Funds