April 02, 2008 at 3:00 pm by Tom Lydon
There’s a battle going on: which commodity exchange traded funds (ETFs) are the best hedge, gold or agriculture?
And the answer is…well, we’re not sure. Roger Nusbaum for The Street says that since August 2007, streetTRACKS Gold Shares (GLD) outperformed for awhile. Then PowerShares DB Agriculture Fund (DBA) was the strong one. When all was said and done, it was a tie.
Roger suggests that when it comes to hedging, 2%-3% in GLD or GBA is sufficient enough to benefit from strong performance without causing severe anguish in the event of a correction.
As with everything else in life, it’s all about moderation. Commodities are a useful tool in bear markets, but they also work like other investments: they can correct, and you can lose. Having your exit strategy in place is a good way to protect yourself if that happens.
Some of the many other commodity-based ETFs are:
- GreenHaven Continuous Commodity Index (GCC)
- ELEMENTS Linked to the MLCX Biofuels Index (FUE)
- PowerShares DB Silver Fund (DBS)
- United States 12 Month Oil Fund (USL)
- Market Vectors Coal (KOL)
For full disclosure, some of Tom Lydon’s clients own shares of GLD.
Tags | Agriculture, Coal, DBA, Energy, GLD, Green ETFs, KOL, Metals, Oil, Silver
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