Commodities investors have had the great option of using exchange traded funds (ETFs) to get easy and efficient access in one single transaction. Now insiders are wondering if money-making commodities can continue their golden run and which ETF to choose from out of the ever-growing pool of choices.
In the past year through April 24, the Dow Jones Industrials was down 0.8% and the S&P 500 was down 6.2%. In that same timeframe, the Dow Jones AIG Commodity Index ETN (DJP) was up 16.9%.
Can commodities actually keep up the pace? Despite last month’s correction, some economists believe that prices will stay strong, reports Joshua Lipton for Forbes. The real clues to their direction mostly hinge on what happens with the Federal Reserve. The number one driver of commodities, according to Brian Wesbury, chief economist at First Trust Porfolios, is monetary policy.
If the Fed continues to make rate cuts, look for the sentiment on commodities to remain bullish.
No doubt supply and demand is a factor, too. Kevin Kerr, president of Kerr Trading International, points to the rising middle class that’s seeking out better food and higher-quality meats.
Kerr also cautions investors: three years ago, corn was a bargain. Now it’s very expensive, it’s less of a deal and there’s more risk involved.
Playing commodities through ETFs has become a popular bet. TrimTabs Investment Research reports that assets in commodities are up 84%.
There are a number of ways to invest in commodities through both ETFs and ETNs. Some hold futures for certain commodities, others hold stocks for companies that deal with agriculture. Among your choices: