Commodity markets are cyclical, with different commoditiestrading in and out of favor based on factors ranging from natural disasters to government policies in specific countries or regions, and as the past eight months have shown, changes in price direction can be swift and powerful.
Complete exposure to commodities should include weightings to all the major subsectors: precious and industrial metals, energy, agricultureand soft goods such as cocoaand coffee.
Owning a variety of broad-based ETFs with low costs and large asset bases that derive exposure through the physical commodities, futures contracts and stocks engaged in producing the commodities is an efficient way to access the asset class.