ETF Spotlight on PowerShares DB Base Metals (NYSEArca: DBB), part of a weekly series.
Assets: $507 million
Objective: Tracks the Deutsche Bank Liquid Commodity Index – Optimum Yield Industrial Metals Excess Return
Holdings: DBB holds futures contracts on three of the most liquid and widely-used base metals: aluminum, zinc and copper; each makes up one-third of the fund.
What You Should Know
- DBB is up 2% year-to-date
- Has an expense ratio of 0.75%
- Since it’s made up of futures contracts, it will be reported on K-1 tax forms
- When markets are in contango, it can have a negative effect on ETFs that own front-month futures [How Contango Affects ETFs.]
The Latest News
- Industrial demand for base metals is expected to take off as emerging economies continue to build up. It’s anticipated that the biggest beneficiaries of this will be aluminum, copper, nickel, lead and zinc, reports AAP on The Sydney Morning Herald.
- Commodity Online reports that China and India are expected to be big catalysts for base metals prices, as both economies see more industrial growth this year. [A Guide to Investing in Metals ETFs.]
- The U.S. dollar has been weakening, lending some support to these metal prices. As the dollar weakens, commodities priced in dollars will become cheaper for overseas buyers.
- The world’s supply of copper is concentrated in Chile. Worries about supply have been reinforced by the large earthquake and interruptions in mine production, reports Rebekah Curtis for Reuters. [The State of Aluminum, Copper and Nickel ETFs.]
For past ETF Spotlights, go to our ETF Spotlight page.
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.