Most financial professionals agree that obtaining a broadly
diversified investment mix is a prudent strategy. But many investors are
missing market exposure to one overlooked category: Commodities.
Like stocks, bonds, and real estate, commodities are an
important asset class. Commodities are tangible assets used to manufacture and
produce goods. Products like agriculture, energy, livestock, metals, timber and
textiles are examples of commodities. The agriculture segment, for instance,
includes familiar commodities like cotton, corn, coffee, and wheat.
Many commodity ETFs follow total return indexes which are
designed to benchmark the return of fully collateralized commodity futures.
Others invest in a single commodity by taking physical delivery.
Three things to keep in mind before investing in commodities
- Avoid Problem Products
- Coordinate Your Commodity Investments
- Choose Diversified Baskets
Source: (ETF Guide.com)
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