I read parts of that study (a bit to formal for me) , here's the last paragraph (and):

"No matter which set of returns was used, including commodities in the opportunity set improved the risk-return characteristics of the efficient frontier. Furthermore, commodities played an important and significant role in the strategic asset allocations. Given the inherent return of commodities, there seems to be little risk that commodities will dramatically underperform the other asset classes on a risk-adjusted basis over any reasonably long time period. If anything, the risk is that commodities will continue to produce equity-like returns, in which case, the forward looking strategic allocations to commodities are too low."

I'm not sure what the last sentence said. (?) 

But I like DJP.

Thanks zarathustra that was an interesting read. I too lean to DJP because of more diversification and have been waiting for the price to come down to about 48.

As you can see I haven't checked this forum for a while because of it's lack of activity. I wonder where all those former M* folks went that were all over this website a couple of years ago.

Thanks again

would be my choice because of its broad exposure.

However, I'm not sure the high ER and brokerage costs wash out the diversification benefit. For now, I'm staying away.

Good Luck, Ken. 

Thanks to all who replied. I'll be keeping an eye on DJP. Smokey, I believe that sentence in the article is like a worst case scenario. Since there seems to be no offsetting vehicles anymore I'd like to try anything I can get. When domestic stocks are down, we used to be able to count on bond funds and international equities to smooth us out but it seems we now need more.

If anyone else has ideas that would help our portfolio's stay on a more even keel, besides maybe real estate and cash, when the market is down, chime in.

Thanks for the good string.

 

 

It makes sense to allocate 5 to 10% of your portfolio to commodities. I have owned DJP over a year. The other funds have an overwieght towards oil. I know oil is the place to be but I wanted a more broad exposure to the area. DJP allows no more then 30% in one commodity, I beleive DBC has a 70% exposure to oil, at that point why not just buy OIL. At .75% and a annual rebalancing with a percentage cap DJP makes a lot of sense to me. I have done very well, in fact I added more last week. The word of caution is, commodities soar and then fall hard, stocks seem to have a smoother ride and also commodities have under performed equities in longer time frames. Good luck

You may wish to check the thread at Index Universe for some discussion of this topic and IMO, for some good ideas from Larry Swedroe and others.

Thanks for reminding me of the 70% exposure to oil. I bought this a couple of months ago when I was in my "why not" frame of mind and it has done very well. However, I think I will take profits Monday and reallocate to DJP for all the reasons mentioned. The news going forward on commodities just seems to make sense to have some.

DBC does NOT have a 70% exposure to oil.  It has a total exposure of 55% to Energy of which 35% is crude oil and 20% is home heating oil. I currently own DBC and it has significantly outperformed DJP on both a YTD (21.4% vs. 11.0%) and 1-year basis (24.7% vs. 9.9%). I believe that most of the outperformance comes from the "optimum yield" strategy that the fund uses.

One problem with DJP - it is an ETN not an ETF.  There is some risk when buying a note, even from Barclays. With an ETF there is no such risk; you own the underlining securities. ETN is a promissory note. Just one more bit of risk to be aware of

Question: If you are investing for the long term, why are you so concerned about volatility? Is it because you have a relatively low risk tolerance? (I don't mean that pejoratively.) Personally, I think DJP is a great choice for a bit more diversification. But I also think stability in the portfolio is overemphasized these days---especially for people with long time horizens.

I went with DBC.  The ETN risk associated with DJP, along with DBC's active management strategy to minimize contango made DBC the preferred choice for me of the two.

mase