Commodity fund

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A commodity fund is a fund that has direct holdings in commodities.

the funds are often seen as a way to diversify an investment portfolio beyond stocks and bonds. This is because commodities are often viewed as a hedge against inflation. The prices of commodities tend to rise in step with inflation. This movement trends to run counter to stock prices.[1]

The National Futures Association (NFA) proposed in June of 2010 that mutual funds investing in futures contracts register not only with the Securities and Exchange Commission (SEC) - as they've been doing for decades - but with the Commodity Futures Trading Commission (CFTC) as well. Industry insiders believe that dual registration would increase disclosure to investors about what the funds own, making fees and costs more readily apparent. It would not change what the funds could buy, nor the recourse investors would have if things would go wrong.[2]


References

  1. Commodity Mutual Funds. Money-Zine.
  2. Financial reform won't make commodity funds safer. MarketWatch.