Mutual funds that invest directly in commodities are receiving a lift from some investors who view the sagging U.S. dollar as a signal to diversify out of equity holdings, The Wall Street Journal reports.

Downward trends for the U.S. dollar move in the opposite direction of commodity prices, experts say, because more flaccid currency is needed to buy the same amount of consumer staples.

Mutual funds rarely invest directly in commodities, but commodity portfolios that specialize in precious metals and energy are undoubtedly enjoying renewed interest from investors . Lipper counts more than 40 natural resources mutual funds and 20 gold mutual funds, although only a few of these investments buy commodities in the form of futures contracts.

Natural resources funds on average have risen 33% this year, mainly buoyed by skyrocketing oil prices. Within the subset of funds that own commodities the $1.1 billion Oppenheimer Real Asset Fund and $6.1 billion PIMCO Commodity Real Return Fund have respectively generated returns of 34% and 24% this year.

Strong year-to-date performances of the commodities funds have helped pique investors’ appetites for the newly launched Merrill Lynch Real Investment Fund and State Street Global Advisors’ StreetTracks Gold Shares exchange-traded fund. Regulatory filings show PIMCO has laid the groundwork for a closed-end companion fund to its open-end commodities fund, and in September Scudder Investments launched its closed-end Global Commodities Stock Fund.

__

The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.