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The Investment Assets Handbook: A definitive practical guide to asset classes by Yoram Lustig

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Chapter 6: Commodities

The quest to find asset classes with a low correlation with other investments, real returns (to act as a hedge against inflation) and positive performance when other markets are under stress and in turmoil has increased the interest in commodities in recent decades. Including commodities in portfolios expands the investable universe, broadens the investment opportunity set and enhances diversification, resulting in an improvement in the risk-adjusted return characteristics of these portfolios.

The Oxford Dictionary states that a commodity is “a raw material or primary agricultural product that can be bought and sold, such as copper and coffee.” Commodities are essential resources and agricultural products. They are a ...

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