Commodity ETFs an Option for Diversification

The popularity of commodity based exchange traded funds (ETFs) is on the rise. But before you rush out to buy, one must remember commodities are volatile, even during the best of times. Also note most of the commodity ETFs are not old enough to accurately gauge their performance. Jesse Emspak of Investor’s Business Daily reports a lot of the new ETFs had to do with the hot oil market, which has cooled in the recent months. Many believe the commodity ETFs are useful for a long-term investment and diversification – some will track a broad basket of commodities rather than just one. It’s also important to remember commodities don’t really track the market, they have zero correlation.  As with any other investment opportunity, do the research and make sure it fits with your goals and in your portfolio.  There are always risks and rewards to weigh before making the decision.