To bet on the outlook for oil and metals, you can buy either commodity ETFs or natural resources mutual funds. Lately, many shareholders have preferred ETFs, which have attracted $7.3 billion in inflows this year. Mutual funds have received only $742 million. But those who favored ETFs have been disappointed.During the past year, the average resource mutual fund has returned 12.8%, compared with a return of 0.9% for iShares GSCI Commodity Index ETF ( GSG), according to Morningstar ( MORN). Other popular ETFs that have lagged mutual funds in the past year include PowerShares DB Commodity Index ( DBC) and U.S. Natural Gas ( UNG). Besides delivering subpar returns, the ETFs have also failed to provide much diversification. The ETFs began gaining popularity in 2007 as shareholders became convinced commodity prices would rise along with demand from emerging markets. Even if prices didn't climb much, investors figured commodities would provide diversification because that had often been true in the past. During the 1980s and 1990s, commodities sometimes rose during periods stocks languished.
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