For most of the 19th century, commodities were used and understood solely by farmers, miners and the companies that owned them. Now, of course, investors and their advisors have increasingly recognized the potential benefits of investing in this asset class. These benefits include a low correlation to the broad equity markets, strong relative performance over the past several years and a hedge against inflation. As a result, new products have emerged that have made it easier and much less expensive to invest in commodities, including both commodity-focused mutual funds and ETFs.

But in many cases, the returns delivered by these new vehicles have not matched investor expectations. In large part, this is caused by factors understood well by experienced commodity traders, but perhaps less so by some advisors and investors - the return-reducing impact of contango and roll yield.

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