Commodity ETF's are a recent addition to the financial industry
that permits investors and traders to invest in an product that tracks
the index of commodity based products or a basket of underlying commodity
stocks. Exchange traded funds have grown popular in recent years as
an alternative to investing in shares, options and futures. In the
case of commodities, it is a less risky way to gain exposure that
would otherwise require the use of derivatives. ETF's that comprise
stocks also offset risk because the product is weighted according
to the constituent stocks as opposed to one particular stock.
The following represents some commodity based ETF's:
PowerShares DB MS Agri (DBA)
This is an agricultural commodities ETF that is designed to track
the Deutsche Bank Liquid Commodity Index-Optimum Yield Agriculture
Excess Return Agriculture ER.
This is designed to reflect the agricultural sector. Investors and
traders can take long or short positions in this ETF in accordance
with their market objectives.
PowerShares DB Cm Index (DBC)
This commodity exchange traded fund is also designed to track the
performance of the Deutsche Bank Liquid Commodity Index-Excess Return.
iPath ETN DJ-AIG CITR A (DJP)
This ETF fund seeks to track the performance of the Dow Jones-AIG
Commodity Index Total Return.
Market Vectors (Agribusiness): (MOO)
This funds invests up to 80% of available funds in US based business
that have exposure to the agricultural sector.
iShares S&P GSCI Commmodity (GSG)
The ETF Trust seeks to replicate the investment results of the GSCI
Excess Return Index.
PowerShares DB MS PMtl (DBP)
This commodity ETF is intended to reflect the precious metals sector
by tracking the Deutsche Bank Liquid Commodity Index-Optimum Yield
Precious Metals Excess Return
PowerShares DB MS Slvr (DBS)
This ETF fund tracks the Deutsche Bank Liquid Commodity Index-Optimum
Yield Silver Excess Return which is based on the underlying price
of silver.
Other Gold and oil based exchange traded funds are discussed in
on the page related to that topic. Commodity ETF's are expected
to gain increasing exposure as weather anomalies and the US dollar
continues to come under pressure in response to changes in market
forces and structure. As an alternative to outright shares, commodity
exchange traded funds are a versatile investment vehicle that can
be used for short term and long term directional trading. With the
ability to take long or short positions, they can also be used for
hedge management purposes.
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