Even before China devalued its currency in mid-August, prices of hard commodities, such as oil and metals, had fallen from year-to-date highs.

China’s move caused many investors and market analysts to fret that slowing demand from the world’s second-largest economy may push prices even lower. That news may cause investors to wonder whether they should sell commodity-related investments, or whether low prices may signal a buying opportunity.

Some asset managers say investors should look at the bigger picture of all their portfolio holdings. That comprehensive view includes investment objectives and risk tolerance.

Mark Hebner, founder and president of Index Fund Advisors in Irvine, California, is an outspoken advocate of globally diversified, balanced portfolios. He says investors can get commodity exposure through stocks of companies that profit from natural resources. These include miners and oil and gas companies.

Hebner’s website includes interactive charts that compares risk and return characteristics of a commodities index with other asset-class indexes, as well as the firm’s diversified portfolios.

Lack of correlation with stocks and bonds often attracts investors to commodities. But Hebner’s research indicates that’s not necessarily an advantage.

Hebner found that during the 40-year period from January 1975 through December 2014, the Standard & Poor’s GSCI index, which tracks commodities futures, had lower return and far higher risk — as measured by standard deviation — than a one-year bond index.

On a 10-year basis, the commodity index had a slightly higher return than the bond index. However, commodities were much more volatile. For Hebner, those risk and return characteristics are not worth the investment.

“In short, commodities don’t make a profit, but companies make a profit. That is one heck of a reason to invest in companies,” he says.

One problem with volatile asset classes is that investors may be tempted to sell out during a rough patch. Despite best intentions of timing the market perfectly, investors who sell often miss out when the investment turns higher again. Often, as Hebner notes, exposure to a particular asset class is not even necessary, because a portfolio can be constructed with other types of investments that generate the required return while mitigating risk.

Adam Freedman, chief investment officer at CircleBlack in Princeton, New Jersey, says investors who appreciate the diversification advantages of commodities must also understand the potential downside of volatility.

“Commodities don’t move in lockstep with stocks and bonds, so adding commodities to a portfolio tends to increase the portfolio’s diversification. But commodities are also a very volatile asset class. Whether the additional diversification outweighs the high volatility depends on what else is in the portfolio and also what return commodities will provide,” Freedman says.

Investors often turn to commodities as an inflation hedge. That’s because hard assets often rise along with inflation. Even so, the old rule about past performance not guaranteeing future returns still applies.

“Unfortunately, there’s no surefire way to predict how well commodities will do as an investment. While the return on commodities should, in theory, track the inflation rate over the long term, the funds that individual investors buy typically get exposure to commodities through futures markets. The returns from investing in commodities futures can be much higher or much lower than the inflation rate, even over long periods of time,” Freedman says.

In addition, investors are not generally as familiar with commodities as they are with other asset classes.

“Unlike with stocks or bonds, where getting diversified exposure to the broad market is fairly straightforward, commodities are more nuanced,” Freedman says. “Even indices that aim to represent the overall commodities market can differ dramatically in terms of what commodities they invest in and how they rebalance them. These somewhat technical differences can have a substantial effect: Over the past year, the returns on two of the major commodity indices — the S&P GSCI and the Bloomberg commodity index — differed by more than 15 percentage points.”

Michael Delgass, managing director at Sontag Advisory in New York, also urges caution about exposure to commodities outside of diversified stock investments.

“Any diversified portfolio, almost by definition, will have exposure to commodities in one form or another. A broad market stock index contains many stocks that are directly impacted by energy and metal prices, for example. So non-institutional investors generally own commodities either through equities or certain exchange-traded products, which aim to directly track physical commodity prices,” he says.

Occasionally, investors in a widely diversified portfolio don’t realize what they may or may not be holding. That comes into play when a news event or market forecast gets them thinking about their portfolio. “In many cases, investors might underestimate the extent to which they already have commodity exposure just from owning broad equity indices,” Delgass says.

In particular, when there is widespread fear of inflation or a downturn in the stock market, many investors turn to gold.

“Regardless of what anyone’s views are on gold as an investment, an asset which has fallen roughly 40 percent over the last four years should never be marketed as or considered a ‘safe haven’ for an individual’s retirement money, which is unfortunately something that we often hear,” Delgass says. “Our job as advisors is not to predict future commodity price movements, which we believe is a futile exercise, but instead to ensure that our clients are aware of the high volatility and risks associated with these types of investments.”

In addition, investors should not become complacent simply because they own a diversified basket of stocks and bonds that includes commodity exposure.

“When it comes to buying exchange-traded funds or exchange-traded notes that attempt to track physical commodity prices, it is essential to look under the hood and know what you are really buying,” Delgass says. “In the past, many investors have had rude awakenings to find that their commodity ETFs performed quite differently, and often much worse, than the underlying physical commodity spot price.”

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As China Falters, Should You Invest in Commodities? originally appeared on usnews.com