The name of this fund sounds appealing, and Pacific Investment Management Co. (PIMCO) inspires confidence. However, you should never jump into an investment because of a catchy name. This might be one of those examples to avoid.

Fund Strategy

Pimco Commodity Real Return Strategy D (PCRDX ) describes the fund portfolio as such:

“Commodity Index-linked derivative instruments backed by a portfolio of inflation-indexed bonds and other fixed income securities.”

The fund basically uses derivatives exposure to the broad-based Bloomberg Commodity Index, then collateralizes that exposure with a portfolio of Treasury Inflation-Protected Securities (TIPS). The TIPS are intended to add a source of return and an inflation hedge. But if you dig deep on this fund, you will see that aside from optimal conditions, it acts as a hedge on a hedge, which means you’re not likely to see impressive returns. Also keep in mind that TIPS should decline if interest rates rise, and they might decline significantly if interest rates rise sharply. (For related reading, see: Curbing the Effects of Inflation .)

Some people believe that a decline in the U.S. dollar will lead to inflation, which will then drive up the price of commodities. The U.S. dollar has been flying high as of late. For example, take a look at PowerShares DB US Dollar Index Trust (UUP ), which is up 11.38% over the past year. Interest rates will eventually rise and debts must be paid off, the latter leading to fewer dollars in the system, thereby increasing the value of those dollars. For now and the near future, the days of a suffering U.S. dollar and flying commodities are over. But there is a catch. (For related reading, see: Trade a Surging U.S. Dollar with These 3 ETFs .)

When we, as a nation, finally decide to take the responsible path and pay off all of our debts (not going to be easy and should include a lengthy period of deflation), we will have an opportunity to grow organically again. This could be a decade from now. Whatever the case may be, when real growth resumes, we’re likely to see rampant inflation, partially due to Federal Reserve policies now and in recent years. However, that’s likely to be a very long time from now, and even long-term investors see no reason to suffer losses while waiting when better opportunities exist. (For related reading, see: How Much Influence Does the Fed Have? .)

Past Performance

It’s definitely possible for PCRDX to perform well going forward. Ultimately, the decision to invest should be based on your own research. The information provided here should only be seen as tools to help form that decision. And while past performance doesn’t guarantee future success (or failure), it should play at least a small role in your decision-making process. Past performance for PCRDX (as of Dec. 31, 2014):

1-Year -18.47%

3-Year: -10.13%

5-Year: -3.81%

10-Year: -0.80%

Only a masochist would be interested at this point, but there is at least some good news. The good news is that anyone who invested $10,000 on June 28, 2002, would now have $18,930. If you’re confused considering the performance numbers above, this includes performance, fees, and the redistribution of dividends and capital gains distributions .

The bad news is that your original $10,000 investment, which now stands at $18,930, was worth $35,000 in August of 2008. Here are some other performance numbers to consider:

Best 1-Year Performance (2009): 39.34%

Worst 1-Year Performance (2008): -43.61%

Best 3-Year Performance: 21.47%

Worst 3-Year Performance: -12.48%

More Important Numbers

If you’re going to invest in PCRDX, then you should know the following numbers as well:

Net Assets: $10.56 Billion

Annual Dividend Yield: 0.24%

Annual Holdings Turnover: 49%

If you’re going to invest in commodities for the long haul, this doesn’t appear to be the best way to do it. Your potential isn’t maximized during good times, and the risk is still relatively high during bad times. This could change, but past results dont seem to indicate a good risk/reward investment. Please do your own research prior to making any investment decisions. (For related reading, see: Investing in Commodities without the Hassle: Try Commodity ETFs .)

Dan Moskowitz does not own any shares of PCRDX .