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The Short Answer

Does a Commodity Investment Belong in Your Toolkit?

Most avenues provide imperfect exposure.

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Question: A couple of years ago, it seemed that everyone was recommending that I put a small percentage of my portfolio in commodities to help fight against inflation. But lately I've been reading more about the how these funds haven't worked out as expected. So should I add commodities, or not?

Answer: Thanks for a timely question. Although there's a lot of research pointing to the beneficial effects of holding commodities in a portfolio, lately investors might be feeling like the current batch of commodity-focused products isn't quite ready for prime time.

I'll admit that I was a skeptic when financial-services firms and advisors began pushing commodities five or so years ago. Commodities enjoyed a stunning runup in the first part of this decade, and asset classes always seem to catch on as "must-have" only after they have enjoyed a big period of outperformance. Coincidence? I think not.

Christine Benz does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.