The Role of Commodities and Timberland in a Portfolio

Over the last several years, institutional investors have more than doubled their allocation, to over $110 billion, to financial products whose returns are linked to those of commodity indices.

Commodities may be attractive due to the low correlation between the returns of commodities and those of other asset classes, the high correlation of commodities returns with unexpected inflation, or the rising demand for commodities from fast growing emerging markets countries, such as China and India.

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