ETF Spotlight on the United States Commodity Index Fund (NYSEArca: USCI), part of an ongoing series.
Assets: $494 million.
Objective: U.S. Commodity Index Fund tries to reflect the daily percent changes of the SummerHaven Dynamic Commodity Index Total Return, which tracks the performance on a diversified group of commodities.
Holdings: The fund tracks physical non-financial commodity futures contracts in six commodity sectors, including energy, precious metals, industrial metals, grains, softs and livestocks.
What You Should Know:
- USCI has an expense ratio of 0.95%.
- Eligible commodities the underlying index may hold on a monthly basis include: Crude Oil (Brent), Crude Oil (WTI), Gas Oil, Heating Oil, Natural Gas, Unleaded Gasoline, Feeder Cattle, Lean Hogs, Live Cattle, Bean Oil, Corn, Soybeans, Soybean Meal, Wheat, Aluminum, Copper, Lead, Nickel, Tin, Zinc, Gold, Platinum, Silver, Cocoa, Coffee, Cotton and Sugar.
- Commodities can be very volatile.
- USCI tries to mitigate the effects of contango in the futures market, which may eat away at returns. [Investing with Commodities ETFs]
The Latest News:
- A second Greek bailout helped bring investor confidence back into the markets, writes Gareth Soloway for The Wall Street Journal.
- The depreciating dollar has helped drive commodity prices higher.
- The ETF “attempts to exploit momentum and backwardation as signals of inventory tightness, which, according to the theory of storage, predicts excess returns,” Morningstar writes in a profile of some innovative ETFs. “While academics have created their fair share of products that don’t work, the industry’s record as a whole is a lot worse. We think the fund’s rigorous theoretical basis helps its chances of outperforming over products of more dubious provenance, but it’s no guarantee.”
For past stories in this series, visit our ETF Spotlight category.
United States Commodity Index Fund
Max Chen contributed to this article.
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.