How to Invest in Commodities Funds

Also, since an investor can purchase these products without leverage, they do not have to worry about losing more than their initial investment. All of these benefits can allow commodities to become part of an overall diversified asset allocation portfolio for the long term.

TheStreet.com: What about specific solutions offered by your firm?

Direxion offers two such mutual funds: The Commodity Bull 2X Fund(DXCLX Quote), which provides 200% exposure to a commodity related stock index, and the newly introduced Direxion Commodity Strategy Fund(DXCTX Quote), which tracks the S&P CTI index and is the first long/short commodity fund of its kind.

DXCTX offers exposure to commodities with more diversification and less volatility than an individual commodity future contract or a long-only commodity index investment.

TheStreet.com: Is the Direxion Commodity Trends Strategy Fund designed to exactly replicate the performance of the Standard & Poor's Commodity Trends Indicator (S&P CTI)?

The Direxion Commodity Trends Strategy Fund is designed to seek daily investment results, before fees and expense, of the performance of the S&P CTI. Due to the fees and expenses, the fund's performance will not typically be exact to that of the index.

TheStreet.com: How does DXCTX differ from other open-end mutual funds and exchange-traded funds that focus on commodities?

The Direxion CTSF is the first "pure" commodity mutual fund that takes both long and short positions on 16 different commodities across six sectors.

The Direxion Commodity Trends Strategy fund can take advantage of the cyclical nature of commodities because the S&P CTI index goes both long and short various sectors. The long components can hedge inflation, while the short components can benefit from down-trending commodity markets that are oversupplied.

As a replicator of the S&P CTI index, the fund is an all-weather vehicle that can potentially profit in any market environment. The long/short combination of holdings mitigates the extreme volatility sometimes exhibited in individual commodities and long-only commodity indices. The index maintains low correlation to stocks, bonds and other long-only commodity indices.