Mutual funds have existed for decades and most people are already familiar with them. This financial instrument has expanded than just stocks and bonds. A number of mutual funds have been designed that are made up of more exotic asset classes. One of these new options are commodities. The typical person would wonder why they should invest in wheat and steel. But there are a number of reasons why they can make a critical component of a portfolio.

For one, the investment return possibilities are enormous. Many people have heard of the billionaire George Soros. While he can be popular because of his opinions (both political and financial), many would be surprised to learn that he made his fortune with commodities. The financial world of commodities is huge. And the market is quite volatile, creating ample profitable investment opportunities.

Second, there are several trends that many expect to drive a bull market in commodities. The growth of China and India is expected to greatly increase the demand of commodities such as iron ore and food. There has also been a theory bandied about called "peak oil". According to some analysts, the world has already discovered most of the oil available on the planet. Some believe production has peaked or will soon peak. This will obviously have a huge impact on the price of oil. Most mutual funds that are composed of commodities carry a large position in fossil fuels. As you can see, there are several megatrends that portend well for commodity mutual funds.

Third, this asset class is uncorrelated with the main components of the typical portfolio: stocks and bonds. Stocks and bonds are usually cited as how they are a good combination because they do good and bad at different investment cycles. For the most part this is true. But there have been cases when both asset classes have performed poorly. Adding another asset class would not hurt. For many investors, this third uncorrelated asset has been commodities. Made up of such "hard assets" such as gold and oil, they can really anchor a portfolio in a world of increasing instability and inflation.

Many people of been putting their money into the best commodity mutual funds. The benefits are obvious. The potential investment returns, the wind behind asset class and the uncorrelated returns are three investment pillars that have lured investors to commodities. Finding a top commodity mutual fund can be a great way to anchor your portfolio with a high return investment group.