Commodity futures prove effective for hedge fund diversification and risk management.
Commodity futures are a good way for hedge funds to manage risk and diversify their portfolios. These funds trade in commodities, currencies, bonds, and stocks. Commodity futures are contracts where two parties agree to exchange goods or assets at a set price in the future. The costs involved in these contracts include insurance, storage, and interest. Research shows that investing in commodity futures can help hedge funds diversify their investments and achieve positive performance results.