Commodities for Every Portfolio: How You Can Profit from the Long-Term Commodity Boom

Chapter 7

Participating Through Mutual Funds

The only source of knowledge is experience.

—Albert Einstein

Since the start of this bull market, there has clearly been an increase in the number of mutual funds that fall under the natural resource and commodity sectors. If you look at the different commodity mutual funds today, you will notice that most do not have a track record that goes beyond five years. The emergence of additional commodity mutual funds has occurred as many fund companies have positioned themselves to participate in a sector that has outperformed other sectors over the last several years. This growth has provided additional options for investors who want to use commodity mutual funds as their primary investment vehicle for participating in this long-term commodity boom.

In this chapter I look at the various types of commodity mutual funds as well as the pros and cons of investing in mutual funds and what factors you should look for when selecting mutual funds.

Scanning the Mutual Fund World

In a way, commodity mutual funds epitomize the various ways that you can profit from this long-term commodity boom. You can invest in mutual funds that invest in stocks, or you can invest in mutual funds that invest in futures. You can also invest in mutual funds that cater toward a specific sector, or you can invest in mutual funds that cover a variety of sectors. Indeed, investing in a commodity mutual fund can mean a number of different things. All told, several hundred ...