<b>Your Money</b>: Limit exposure to commodity funds

Retail investors are better off betting on diversified fund in the domestic & international markets

International funds focused on commodities/natural resources have rallied sharply over the past one year. These returns are much higher than the single-digit returns given by Indian benchmark indices such as the Sensex and the Nifty (7.81 and 8.96 per cent, respectively). Experts, however, warn that investors tempted to invest in these funds should be aware of the risks that commodity-focused funds carry.

The stimulus programmes launched by central banks after the global financial crisis resulted in a rally in commodities, which peaked towards the end of 2011. Thereafter, a downturn began, owing primarily to the slowdown in Chinese demand. In