Commodities investing can go two ways- either owning futures contracts or own shares of companies that produce commodities, and exchange traded funds (ETFs) can help you.
Scott Burns for Universal Press Syndicate reminds us that periods of price inflation tend to hurt equity valuations, so the benefit of rising commodity prices are lost if you invest in the companies that produce them.
Investing in one of the ETFs that duplicates a commodity index is a good option. The three broad-based commodity indexes ETFs are:
- iPath Dow Jones AIG Commodity Index Trust (DJP)
- iShares S&P GSCI Index Trust (GSG)
- Powershares DB Commodity Index Tracking Fund (DBC)
All three have an expense ratio of 0.75% and therefore, make them relatively pricey additions to your portfolio.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.