Use ETFs to Balance Your Portfolio With Hard Assets

Most investors build a portfolio of stocks, bonds and cash. But if you want to smooth the ups and downs of the traditional mix of investments, consider adding hard assets such as real estate, precious metals (gold and silver), base metals (copper, nickel, lead, aluminum) , energy (gas and oil) wood products (timber, pulp and paper).

Hard assets tend to go up when most stocks go down and vice versa. So a portfolio with hard assets should not be as volatile as a portfolio of only stocks and bonds.

To own hard assets you can buy the asset itself, stocks of companies that own and manage hard assets and mutual funds that hold stocks of hard-asset companies. But exchange-traded funds (ETFs) are the easiest investment alternative because they include baskets of hard-asset stocks and usually have lower fees than mutual funds.

Eleven ETFs let your own stocks of most of the hard asset classes.

Hard Asset ETFs
Asset	ETFs
Many Classes	iShares Goldman Sachs Natural Resource (IGE)* and iShares Dow Jones Basic Materials (IYM)
Real Estate	iShares Dow Jones US Real Estate (IYR), iShares Cohen & Steers Realty Majors (ICF), streetTRACKS Wilshire REIT Fund (RWR) and Vanguard REIT Index VIPERs (VNQ)
Precious Metals	streetTRACKS Gold Shares (GLD)
Energy	iShares Dow Jones US Energy (IYE), Energy Select Sector SPDR (XLE), iShares S&P Global Energy Sector (IXC) and Vanguard Energy VIPERs (VDE)
* As of July 2005 IGE is heavily weighted in energy stocks.