Most investors appreciate that a diverse allocation of portfolio resources is the best way to insure against volatility and to increase returns. Indeed, most investors will spread their investments between cash, fixed income and equity holdings - even diversifying within those broad categories to ensure exposure to foreign equities and debt. But a great many investors fail to avail themselves to another very broad class of assets: the commodities.

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Commodities are now available to all investors as ETFs, in addition to stock in companies operating in discrete commodity-related businesses. Below, we round up the commodities asset class performance for the year 2009.

We start with the agricultural funds, which turned in a relatively flat performance in 2009, rising less than 1% over the year (as of early December) as measured by the PowerShares DB Agriculture Fund (NYSE: DBA). DBA is designed to move in line with the Deutsche Bank Liquid Commodity Index - Optimum Yield Agriculture Excess Return, an index that follows a select group of commodities futures weighted toward corn, soybeans, sugar, cattle, cocoa and coffee.

The Oil Complex - Not So Simple
The returns in the oil group this year were diverse, to say the least. After reaching record highs last year of nearly $150 per barrel, crude oil fell precipitously, losing three-quarters of its value before stabilizing and turning "north" again. For those who bought at the March lows, the gains were significant, but on the year the returns were flat, up just a fraction of a percent as read by the iPath S&P GSCI Crude Oil Total Return ETF (NYSE: OIL).

Natural Gas was a different story altogether. Starting last New Year's Day, the United StatesNatural Gas Fund (NYSE: UNG) went straight downhill. On the year, losses totaled just shy of 60%, making it one of the worst corners of the commodities market in 2009. In most years, crude and natural gas will trade in tandem. (For related reading, check out Commodities That Move The Markets.)

Precious Commodities Investments
Gold, of course, was the investment darling of the commodity world in '09. As measured by the SPDR Gold Trust (NYSE: GLD), gold rose better than 25% on the year. Gold's poorer cousin, silver, was even more successful. The iShares Silver Trust (NYSE: SLV) turned in a 50% rise since last New Year's. Both ETFs hold just their respective stores of bullion.

The Wrap
The commodities world was a mixed bag in 2009, but a diverse array of commodities-based investments would have augmented returns while suppressing overall portfolio volatility. (For more, see Introduction To Exchange-Traded Funds.)

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