Commodities are not usually the core holdings that investors look to build portfolios around. They are typically after-thoughts that may be purchased for minor diversification benefits, as an inflation hedge, or even as a short-term trading strategy.

Yet with the proliferation of exchange-traded funds and increasingly efficient indexes, it’s becoming easier to own a basket of commodity-linked investments.

So, what are commodities? Think hard assets such as gold, silver, oil, gasoline, agriculture products, and industrial metals. Many of the building blocks that the global economy utilizes every day. These assets can be purchased individually or through an exchange-traded fund with the added benefits of transparency and liquidity.

Many investors have abstained from commodity exposure in their portfolios due to the significant deflationary trend that developed from 2013 – 2016. That period created a great deal of excess volatility and non-correlated returns to stock and bonds that made it difficult to justify a position in oil or gold.

Fortunately, that trend appears to be finally reversing higher and there are a number of different ways that ETF investors can take advantage of it.

One of the more popular funds in this space is the PowerShares DB Commodity Index Tracking Fund (DBC), which has over $2.4 billion in total assets. DBC tracks a diversified basket of agriculture, energy, and metals sectors through the purchase of direct futures contracts. It’s also one of the longest tenured commodity ETFs with a track record dating back to 2006.

As you can see on the chart, this fund bottomed in 2016 and has been working to develop and sustain a competitive uptrend ever since. The majority of this recent move has been driven by the rise in energy prices, as they make up a significant percentage of the underlying exposure within the portfolio.

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