Commodities have long been stereotyped as an exceptionally volatile investment, but in the past five years at least, this has not been true of all of the mutual funds and ETFs that are categorized as broad-basket commodity funds. In fact, some funds would have made a very positive return to a typical portfolio with relatively low volatility.
As defined by Morningstar, "broad-basket commodity portfolios can invest in a diversified basket of commodity goods, including but not limited to grains, minerals, metals, livestock, cotton, oils, sugar, coffee and cocoa. Investment can be made directly in physical assets or commodity-linked derivative instruments, such as commodity swap agreements."
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