NEW YORK ( TheStreet) -- A mutual fund from Fidelity that has generated a lot of interest from my readers is the Fidelity Global Commodity Stock Fund ( FFGCX).

Emerging-market demand, supply constraints and inflation are among the reasons often cited in favor of commodities, but it didn't hurt that many companies have seen their stocks rebound very sharply off their lows.

One advantage to investing in companies that produce commodities, rather than the commodities themselves, is the benefit from leverage. For instance, if oil costs $80 per barrel and it goes to $100, you would gain 25 percent investing in oil. A company that produces oil at a cost of $60 a barrel would see its profit on each barrel rise from $20 to $40, a gain of 100 percent.

It doesn't work out that easily in real life, however, because the price of the commodity must increase faster than expenses. Farmers use fertilizers, miners need drills and oil producers need pipes, in addition to the energy that all three consume. Besides higher material and energy costs, there's also the risk of higher wages.

The best time to own commodity-producing companies is when the demand for commodities causes them to rise faster than overall inflation. Many commodity bulls believe that greater demand from emerging markets, especially China and India, will drive prices higher with or without inflation. For those who expect higher commodity prices due to devalued currency, however, it's best to stick with the commodity itself.

Back in June, when I first analyzed FFGCX, it had just launched and there wasn't much performance history or even a list of its holdings. We knew that it would be managed by Joe Wickwire, who also manages Fidelity Select Gold ( FSAGX), and that it would track the MSCI All Country World Commodity Producers Sector Capped Index.

From its inception on March 31 to the end of 2009, FFGCX has returned 48.0 percent, compared with the 41.5 percent return in the benchmark, which shows that Wickwire has added value for investors.

Outperformance hasn't come from the No. 1 holding, however. Monsanto ( MON), with 5.4 percent of assets at the end of November, has only gained 17.7 percent in 2009. Top-ten holdings Chevron ( CVX), with 2.3 percent of assets, and Potash ( POT), with 2.9 percent of assets, weren't drivers of the outperformance either, although they did put in strong performances.

It was top-ten holdings in three miners that delivered outperformance for the fund: Rio Tinto ( RTP), 2.5 percent of assets, BHP Billiton ( BHP), 3.7 percent of assets, and Vale ( VALE), 2.3 percent of assets, gained 44.1 percent, 55.4 percent and 90.0 percent, respectively, since the fund's inception.

While miners delivered the returns, the fund has a slightly larger allocation to energy, with 33.0 percent of assets in that sector through November, compared with 33.8 percent for the benchmark through September. The agricultural and metals sectors are not broken out separately.

Geographically, the U.S. dominates, with 41.9 percent of assets, followed by 15.3 percent in the U.K., 11.1 percent in Canada, 5.4 percent in Brazil and 3.3 percent in Switzerland.

It's the international exposure that provides the main benefit for FFGCX. Many companies in the commodity sectors rely on global economic growth and global market prices, with the most obvious example being crude oil. However, individual countries may deviate from global economic trends, and more important, they often deviate in terms of financial performance.

Other Fidelity funds offer concentrated sector exposure, such as Fidelity Select Materials ( FSDPX) or Fidelity Select Natural Resources ( FNARX), but these funds have 89 percent and 72 percent of assets invested in the United States, respectively. They also tend to invest 80 percent of their holdings in just one sector.

Other Select mutual funds with concentrated exposure include Fidelity Select Energy Service ( FSESX), Fidelity Select Energy ( FSENX), Fidelity Select Natural Gas ( FSNGX) and Fidelity Select Gold ( FSAGX).

Since the inception of FFGCX, it has performed in the middle of the pack, with similar returns to most of these mutual funds. Fidelity Select Materials ( FSDPX) and Fidelity Select Energy Service ( FSESX) outperformed the group, while Fidelity Select Gold ( FSAGX) underperformed.

FFGCX has a $2,500 minimum investment and a 1.42 percent expense ratio. There is a 1.0 percent redemption fee for shares held fewer than 30 days. The fund is also subject to a small-balance fee for balances under $2,000 that do not use automatic investment plans.

-- Written by Don Dion in Williamstown, Mass.

At the time of publication, Dion did not have any holdings in the equities mentioned.

Don Dion is president and founder of Dion Money Management, a fee-based investment advisory firm to affluent individuals, families and nonprofit organizations, where he is responsible for setting investment policy, creating custom portfolios and overseeing the performance of client accounts. Founded in 1996 and based in Williamstown, Mass., Dion Money Management manages assets for clients in 49 states and 11 countries. Dion is a licensed attorney in Massachusetts and Maine and has more than 25 years' experience working in the financial markets, having founded and run two publicly traded companies before establishing Dion Money Management.

Dion also is publisher of the Fidelity Independent Adviser family of newsletters, which provides to a broad range of investors his commentary on the financial markets, with a specific emphasis on mutual funds and exchange-traded funds. With more than 100,000 subscribers in the U.S. and 29 other countries, Fidelity Independent Adviser publishes six monthly newsletters and three weekly newsletters. Its flagship publication, Fidelity Independent Adviser, has been published monthly for 11 years and reaches 40,000 subscribers.

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