Commodities have surged this year, luring in billions of investment dollars. Enticed by the big business found in commodities, a fund provider may soon come out with a new commodity exchange traded funds (ETFs) that will be backed by a long-only actively managed benchmark.
U.S. Commodity Funds has begun its paperwork to launch a new diversified commodities index ETF which would track the newly launched SummerHaven Dynamic Commodity Index (SDCI), an actively managed commodities futures index with positions in energy, precious and industrial metals, and agricultural commodities such as livestock, grains and softs, writes Lara Crigger for IndexUniverse.
SummerHaven Index Management picks 14 of 27 commodities based on fundamental factors and then weights the selected commodities equally in the portfolio. The index is rebalanced monthly, which makes the SDCI the first “long-only active benchmark for commodity investors,” comments the company. [2009: A banner year for commodity ETFs?]
SummerHaven was launched by Yale University Professor K. Geert Rouwenhorst. Yale Professor Gary Gorton is a senior advisor to SummerHaven, writes Matt Hougan for IndexUniverse. Rouwenhorst and Gorton wrote “Facts and Fantasies about Commodity Futures” in 2005, which helped legitimize commodities as an asset class.
