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Commodities Revive After Long Downturn -- So Which Funds Are Buys?

Investors should consider holding a stake in energy because it has a big impact on the global economy, says Michael Johnson, head of commodities portfolio management for Goldman Sachs Asset Management.

Energy holdings can protect portfolios against inflation. During periods when energy prices rise, inflation can climb and stocks may sink. "If cotton prices go up, there may not be much inflation," he says. "But if crude oil prices increase, there is a risk of general inflation."

DWS Enhanced Commodity Strategy is more diversified, holding 22% in energy, 38% in agriculture and 18% in industrial metals, including aluminum, zinc and nickel. During the past five years, the fund returned 3.7% annually. Actively managed, the fund aims to overweight attractively priced commodities. The fund is currently underweight energy because the sector has had strong performance in recent months.

A new ETF is First Trust Global Tactical Commodity Strategy (FTGC). The fund has 26% in energy, 26% in industrial metals, and 44% in agriculture products, including hogs, wheat and coffee.

>>Read More: Xerox Is the Biggest Secret in Value Stocks as It Moves Beyond Copiers

>>Read More: Investment Rx: Buy Value ETFs in the U.S. and Growth ETFs Overseas

>>Read More: Could Nissan's Electric Minivan Crush Tesla's Model X?

>>Read More: If You Have Euro-Backed Assets You'd Better Sell Them Right Now

At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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