Do not ignore agricultural commodities

Most investors are accustomed to reading about the gold and oil markets, but few have considered the benefits of diversifying their portfolios using agricultural commodities.

A quick overview of recent performance of agricultural commodities versus the world’s major equity benchmarks indicates this is a sector that should not be ignored. But beyond performance, why invest in commodities? At the broadest level, commodities typically have a low correlation with equities and bonds. Therefore, if commodities are added to a portfolio of equities and bonds, the portfolio will generally have a better risk-reward profile than a portfolio made up of only equities and bonds. Another key concern of many investors is the risk of high future inflation given the unprece...