ETF Spotlight: PowerShares DB Precious Metals Fund (DBP)

September 2nd at 2:21pm by Tom Lydon

ETF Spotlight on PowerShares DB Precious Metals Fund (NYSEArca: DBP), part of an ongoing series on exchange traded funds.

Assets: $658.9 million.

Objective: The ETF tries to reflect the DBIQ Optimum Yield Precious Metals Index Excess Return, which is comprised of futures contracts on gold and silver.

Holdings: Holdings will change based on changes in the underlying futures prices. The fund will hold a base weighting of 80% in gold and 20% in silver.

What You Should Know:

  • Invesco PowerShares sponsors the ETF.
  • DBP has an expense ratio of 0.75%.
  • The fund has risen 11.05% over the past month, 17.21% over the last 3-months and 28.56% year-to-date.
  • The fund follows the Optimum Yield version of the underlying index, which tries to diminish the effects of “negative roll yield.” [Commodity ETFs: Understanding Contango]
  • The index replaces expiring futures contracts, or rolls them over, with new contracts that expire in the month that will generate the highest “implied roll yield.”
  • By targeting the month with the highest implied roll yield, the fund is able to minimize the negative effects of “contango.”

The Latest News:

  • Gold futures rose as high as $1,884.60 an ounce during intraday trading on Friday after the disappointing August employment data, reports Matt Day for The Wall Street Journal.
  • Gold has also been gaining on the prospects that European and U.S. Central Banks will maintain their loose monetary policies. [Precious Metals, Agriculture ETFs Outperforming Stocks]
  • “We’ve got poor economic data, you’ve got sovereign debt issues here and in Europe,” remarked Matt Zeman, head of trading with Kingsview Financial. “I can’t come up with a lot of reasons why gold wouldn’t continue to work higher.”

For past stories in this series, visit our ETF Spotlight category.

PowerShares DB Precious Metals Fund

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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