While slumping this year, commodities have helped dampen portfolio volatility and provided a hedge against inflation. For broad commodities exposure, the GreenHaven Continuous Commodity Index Fund (NYSEArca: GCC) follows an equal-weight methodology that covers 17 commodity positions, and the actively managed PowerShares DB Optimum Yield Diversified Commodity Strategy Portfolio (NasdaqGM: PDBC) is comprised of futures contracts on 14 heavily traded commodities. [An Active Commodity ETF That Optimizes Returns]
Among commodities, gold has stood out as a traditional portfolio diversifier and inflation hedge. Investors who want a more liquid alternative to storing physical bullion under their mattress can take a look at physically backed gold ETF options like the SPDR Gold Shares (NYSEArca: GLD) and iShares Gold Trust (NYSEArca: IAU), with shares representing a fractional ownership of gold bars stored in vaults.
Additionally, real estate investment trusts can act as a portfolio diversifier, although they have become more correlated to stocks in recent years, and provide an inflation hedge. The assets also help investors generate some extra cash on the side. The Vanguard REIT ETF (NYSEArca: VNQ) has a 3.13% 12-month yield and the Schwab U.S. REIT ETF (NYSEArca: SCHH) has a 2.27% 12-month yield. [REITs ETF: Attractive Yields in a Low-Rate Environment]
For more information on ETFs, visit our ETF 101 category.
Max Chen contributed to this article.