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How to Add Diversity to Your Portfolio with Commodities

Investors are generally familiar with the basics of portfolio design and benefits of diversification using different asset classes, especially stocks and bonds. However, commodities are often left out of the mix. Usually this happens because investors aren’t really aware of the fact that commodities are an important asset class when it comes to having a fully diversified investment portfolio.

Adding commodities to your portfolio is easier than you might think. There are a plethora of mutual funds and ETFs specifically geared to the commodities market while many stocks are pure plays to a particular commodity like Alcoa (AA) for aluminum or Barrick Gold (GOLD) for gold.

Lets see how commodities can be effectively used in portfolios.

Be sure to check our Portfolio Management Channel to learn more about different portfolio rebalancing strategies.

The Role of Commodities in the Economic Cycle

commodities and bond market

Examining the Various Niches Within the Commodities Market

Final Considerations