Commodity exchange traded funds (ETFs) can track the price of single commodities, such as gold or oil, groups of commodities or futures contracts. Commodity ETFs allow access into another asset class besides stocks and bonds, so they give portfolios the benefit of increased diversification. Even with the market as shaky as it is right now, commodity ETFs, especially oil, seem to be holding up, as you can see from the chart below.
Oil is an essential proponent for global economies. Emerging markets are demanding more of it, and we’re running out of it, causing the prices to increase, explains Jim Wiandt for Index Universe. However, he cautions that oil and commodity ETFs’ success can only last so long; the market moves in cycles. See Seeking Alpha’s article for more information on commodity ETFs and a list of them.
Because there are more than 18 commodity ETFs and ETNs, one from each subsector is listed below.
- PowerShares DB Commodity Index Tracking Fund (DBC) – up 7% year-to-date
- iPath S&P GSCI Crude Oil Total Return Index ETN (OIL) – up 10.4% year-to-date
- streetTRACKS Gold Shares (GLD) – up 6.4% year-to-date
- PowerShares DB Agriculture Fund (DBA) – up 1.8% for the last three months (launched in January)
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.