The PowerShares DB Commodity Index Tracking Fund (DBC) exchange traded fund (ETF) deserves some special attention for its accomplishments. DBC revolutionized the ETF market by opening the doors to a previously uninvestable area for most investors: commodities. Another benefit of DBC is that it has enormous tax-efficiency potential and no tracking error, says Jim Wiandt for Index Universe. It is currently up 3.3% year-to-date and is above its long-term trend line.
DBC tracks the Deutsche Bank Liquid Commodity Index and invests in futures contracts on six of the most heavily-traded commodities in the world: crude oil, heating oil, gold, aluminum, corn and wheat. However, there are a couple of factors that could affect DBC’s performance:
- As the dollar weakens, gold benefits and in turn would benefit DBC. However, some suggest that could be changing.
- Grain prices have been significantly below their highs. If global droughts were to hit in countries such as the U.S., China and India, they would drive up demand and prices for wheat, which would benefit DBC.
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.