Commodity funds are the funds that invest in commodities like rice, corn, or metals like gold. Like funds investing in stocks, the returns on commodity funds are also linked to the performance and price movements of these commodities in the market. To know more about it, click on the link given below: https://efinancemanagement.com/investment-decisions/commodity-fund

1. By:-
eFinanceManagement.com
https://efinancemanagement.com/investment-decisions/commodity-fund
Commodity Fund

2. 1. Introduction
2. How it Works?
3. Types
4. Advantages
5. Disadvantages
6. Reference
Content

3. Commodity funds are the funds that invest in commodities like rice, corn, or metals like gold. Like funds investing in
stocks, the returns on commodity funds are also linked to the performance and price movements of these commodities
in the market. Commodity Funds can also invest their money into companies that produce these commodities or mining
companies in case of funds linked with metals.
Introduction

4. Investment in commodities is subject to the ups and downs in the price or value of the commodities. All price
movements or changes in the value of the commodities will affect the return of commodity funds. A change in the price
or value of a commodity is due to the forces of demand and supply, besides other factors. Hence, investment in these
funds has its own risks, as well as returns.
As is advisable in other investing endeavors, an investor must possess deep understanding of the commodity market and
the future prospects of the commodity’s value before investing his income in such funds.
How it Works?

5. 1. Index Funds:
A commodity index fund, like stock index funds, will invest in commodities that make up that index. The purpose is to
match the performance of the index.
2. Commodity Futures Funds:
These funds trade on futures contracts. Investors here do not actually want physical delivery of the commodity. They
simply desire to make a profit out of price changes.
3. Natural Resource Funds:
These funds invest in securities of companies that have access to or deal with natural resources like petroleum, oil, gas.
gold, silver, etc.
4. Combination Funds:
Combination funds invest both in actual commodities and commodities futures. A combination fund, for
example, may invest both in physical gold as well as gold futures.
Types

6. Following are the advantages of investing in commodity funds:
• Refuge from inflation
• Strategic diversification
• Flexibility of investment goals
Advantages

7. Following are the disadvantages of investing in a commodity fund:
• Commodity funds are highly risky
• Subject to regulations
Disadvantages

8. Reference
To know more about it, click on the link given below:
https://efinancemanagement.com/investment-decisions/commodity-fund