Two Less-Risky Ways to Invest in Commodities

In addition, for those who believe that money is the ultimate commodity, both the funds have international holdings that have benefitted from the strengthening trend of foreign currencies vis-a-vis the U.S. dollar.

Both the funds have easily outdistanced the S&P 500 total-return index over the most recent 12 months, as well as the past three years. Over the 12 months ended March 31, the leveraged Direxion fund surpassed the impressive return of the broad-based S&P Goldman Sachs Commodity Index by a hefty margin of more than 17 percentage points.

But over the same period, the subdued performance tendency of stocks vs. futures held the return of the RS fund to 15 percentage points lower than the GSCI gauge.

For the first quarter of 2008, the stocks in the Direxion portfolio placed the fund's performance within a single basis point of the negative 9.45% suffered by the S&P 500. At the same time, the relative strength of its commodity-related investments held the RS fund to only a modest setback of 1.21%. By comparison, the commodity boom lifted the S&P MSCI benchmark by 9.92% for the quarter.

In addition to their hoped-for ability to insulate their owners from the impact of inflation, funds that focus on commodity-related stocks will almost certainly suffer less volatility than futures-based or derivative-linked portfolios.

Investors should be aware that a risk in owning commodities-related stocks is that companies in the business of processing commodities and selling the output can suffer profit squeezes that result from elevated raw-material prices on the acquisition side and lids on their final prices caused by buyer resistance on the sales side.

A big concern when considering commodity investments is where we are in the boom-bust price cycle. With the economy weakening and consumers starting to finally pull back, will commodity prices keep heading for the stratosphere?

"COMMODITY FUNDS" INVESTING IN STOCKS RATHER THAN FUTURES OR HARD-ASSET HOLDINGS
	Direxion Commodity Bull 2X Fd	RS Global Natural Resources Fund A	S&P 500 Composite Total Return	S&P Goldman Sachs Commodity Index
Ticker	DXCLX	RSNRX	-	-
TheStreet.com Ratings Grade	C-	B+	-	-
First Public Offering Date	2/17/2005	11/15/1995	-	-
Min. Initial Investment	25000	2500	-	-
Annual Expense Ratio	1.76	1.45	-	-
Ann'l Port. Turnover (%)	612	37	-	-
Total Net Assets ($Mil)	69.6	1969.1	-	-
TOTAL-RETURN PERFORMANCE (%)			-	-
Last 3 Months	-9.44	-1.21	-9.45	9.92
Latest 12 Months	55.02	21.75	-5.08	37.85
Last 3 Yrs. (Annualized)	24.08	22.92	5.85	7.81
COMMODITY COVERAGE
Petroleum/Nat. Gas	Yes	Yes
Coal	No	Yes
Precious Metals	Yes	Yes
Industrial Metals	Yes	Yes
Industrial Chemicals	Yes	Yes
Forest Products	Yes	No
Food	Yes	No
International Holdings	Yes	Yes
For an explanation of our ratings, click here. Source: TheStreet.com Ratings - Data as of 3/31/2008.