Commodity futures offer hedge against lower interest rates, impacting investor returns.
Commodities can be a good investment because they provide exposure to different types of risks. A study looked at commodity prices from 1973 to 2008 and found that investing in commodity futures can protect against lower interest rates. Investors are willing to accept lower returns for this protection. Some commodities also act as a hedge against a weaker U.S. dollar, but this risk is not factored into their prices.