An ETF One-Stop Shop for Commodities Investors
March 11th, 2014 at 7:30am by Tom Lydon
After an array of sour performances last year, a plethora of commodities are surging in 2014. From gold and other precious metals to coffee to corn, many commodities have given investors reasons to smile this year.
For the indecisive investor, the GreenHaven Continuous Commodity Index Fund (NYSEArca: GCC) offers equal weight exposure to 17 commodities. The $336 million ETF, which carries an annual expense ratio of 0.85%, breaks its allocations down as follows: Three energy commodities, four precious metals, four soft commodities and six agriculture commodities.
“So far this year GCC is up 11.3 percent, making it the best performer among its peers. The edge came from its exposure to commodities like coffee and livestock. Of the large commodity ETFs it is the least in sync with the stock market’s movements,” reports Eric Balchunas for Bloomberg. GCC “is less volatile than the S&P 500 and trades 87,000 shares a day. Its expense ratio is 1.05 percent, meaning that it charges investors 1.05 percent of assets on an annual basis. GCC’s expense ratio is high compared to the average equity ETF, and slightly higher than other broad commodity ETFs.”
Although GCC has performed well this year, critics, as Bloomberg notes, are often eager to point out the ETF is not reflective of the true commodities universe. For example, oil and gold, two of the most heavily traded commodities, receive essentially the same allocations in the ETF as more thinly traded corn, coffee and cocoa.
“Because of the equal weighting, GCC offers significant exposure to grains, livestock, and soft commodities and a lower energy weighting than many of its peers. In addition, GCC is rebalanced every day in order to maintain each commodity’s weight as close to 1/17th of the total as possible,” according to Greenhaven.
However, GCC’s exposure to less popular commodities should not be understated. At least not when the iPath Dow Jones-UBS Coffee Total Return Sub-Index ETN (NYSEArca: JO) is this year’s top-performing exchange traded product. [Coffee ETN Keeps on Surging]
And there is certainly nothing wrong with some exposure to corn, cattle and lean hogs. At least not this year when the relevant exchange traded products offering exposure to those commodities are soaring. [Livestock ETNs Impress]
GreenHaven Continuous Commodity Index Fund
ETF Trends editorial team contributed to this post.
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.