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How To Hedging with Funds

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How To Hedging with Funds

Here, some most favorite commodity funds will be reviewed. The broad yet specific review will hopefully help any traders and investors in terms of playing with commodities.

Despite the lasting of investment cycle’s late stage, it actually is not kind to the financial assets. Unfortunately, the overall interest rates rise generally with higher inflation waiting in the end although it is started with rising wages and strong growth. As a result, stocks and bonds prices are hurt in the end.

Responding to this typical situation, many investors and traders tend to apply their portfolio strategies that unfortunately are not effective applied in this stage. Why? The reason is because most of the portfolios consists primarily US bonds and stocks and thereby there are not enough protections and diversifications required.

What usually do well during the late cycle’s stage are inflation and hedges and commodities. This is the reason why two of those things are often included in portfolio with the trend of getting increased along with the progress of the cycle.

Compared to the US stocks, the stocks outside US typically have higher growth and lower valuations which is good news. Therefore, it is normal to say that in the near future, these stocks will give more protection and diversification with higher returns as well.

In the last several months, the commodities have been making strong growth and returns as much as 16.80%. Some of the reasons behind this recent surge include the increase in energy price which is actually a consequence of Syria conflict. The demand for commodities will keep increasing as the global growth continues. Not only the demand but the price will increase too following the rising inflationary expectation.

Among the commodities is water. Yes, water is predicted to be potential investment that will even be more valuable compared to oil. One of the ways to invest in water is via exchange-traded fun. In this case, five ETFs are available.

The first ETFs is the SPGI from S&P Global. This water index ETFs is now under the control of the company known as Invesco IVZ. The portfolio is called as PowerShares S&P Global Water Index. Despite the prediction of water potential in the near future, Wall Street is still unaware shown by the last number of fund gained last year of only 11.5%. Another ETFs is presented by American Water Works with the commodities known as AWK.

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