In portfolio management, what is a major concern when including commodities?

Including commodities in a portfolio is primarily of concern due to their inherent complexity and volatility. Commodities are subject to fluctuating prices based on various factors including supply and demand dynamics, geopolitical events, weather conditions, and changes in economic indicators. This makes them more unpredictable compared to traditional asset classes such as stocks or bonds.

Their volatility can lead to significant short-term price swings, which can pose a risk to overall portfolio stability if not managed correctly. Additionally, understanding the intricacies of the commodities market, such as the impact of futures contracts, storage costs, and economic conditions, adds to the complexity, making it crucial for investors to have a solid grasp of these factors to effectively incorporate commodities into their investment strategies.

In contrast, other options such as guaranteed predictability in returns or tax-free implications do not accurately represent the nature of commodities, which are inherently risky and subject to market fluctuations. Long holding periods may not apply as a primary concern, as commodities can be both short-term trading instruments and long-term investments depending on the investor's strategy.