ETF Trends
ETF Trends

Diversified commodity ETFs have had a tough time in 2014 largely due to the well-known struggles that Oil prices have had for most of the year, and especially the most recent price pressure there.

Precious Metals have been off sharply lately as well with the exception of last Friday’s rally there. DBC (PowerShares DB Commodity Index Tracking Fund, Expense Ratio 0.93%) despite trading at another 2014 low late
last week has only seen about $16 million flow out of the fund year to date, and it notably has rather heavy exposure to Crude Oil prices (Brent Crude is the #1 holding and makes up more than 13.8% of the portfolio while WTI Crude is the #3 holding with a >13.5% weighting).

DBC remains the largest Diversified Commodity ETP in the U.S. marketplace in terms of assets under management, dwarfing its next closest competitor DJP (iPath DJ-UBS Commodity Index Total Return ETN, Expense Ratio 0.75%) with $4.66 billion in AUM versus $1.47 billion.

We have seen notable nibbling year to date in the relative out-performer USCI (U.S. Commodity Index Fund, Expense Ratio 0.80%) as it has pulled in more than $373 million year to date despite also largely suffering price setbacks recently.

This fund notably has more evenly weighted exposure to the various slices of the commodity spectrum (14 futures are held in all) as well as re-balancing positions on a monthly basis, with top exposures currently being Live Cattle (3.62%), Aluminum (3.60%) and Zinc (3.59%). According to fund literature USCI is a rules-based approach, following the SummerHaven Dynamic Commodity Index, which “uses market price signals, including backwardation and 12 month price change.” Interestingly we do not see a position currently in Crude Oil among the 14 futures in the portfolio, but there are some energy exposures at the moment (Heating Oil, RBOB Gasoline, Natural Gas).

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