We spoke about a diversified approach to Commodity futures exposure recently in USCI (United States Commodity Index, Expense Ratio 0.80%) and how such approaches have cushioned the blow to a large extent this year in terms of performance when compared to just long only exposure to commodities such as say Gold, Crude Oil, or Natural Gas.
There have been few winners this year across the diversified commodity spectrum, and putting your eggs in the wrong basket, say Crude Oil, has punished more than a few in 2014.
Thus, GCC (GreenHaven Continuous Commodity Index, Expense Ratio 0.85%, -4.28% YTD) like USCI, has provided some relative shelter when compared to simply being long the “wrong” commodity this year.
GCC employs an equal weighted methodology, tapping into a spectrum of seventeen individual commodities. According to fund literature, “Because of the equal weighting, GCC offers significant exposure to grains, livestock, and soft commodities and a lower energy weighting than many of its peers.
In addition, GCC is rebalanced every day in order to maintain each commodity’s weight as close to 1/17th of the total as possible.” This concept of daily equal weighting is actually quite unique across ETFs, and it is true that GCC has a significantly lesser slant to energy than peers in the Diversified Commodities space like the larger DBC (PowerShares DB Commodity Index Tracking Fund, Expense Ratio 0.93%) and DJP (iPath DJ-UBS Commodity Index Total Return ETN, Expense Ratio 0.75%), which in markets like 2014, has proven to be beneficial. GCC has had modest net inflows year to date, pulling in a bit shy of $5 million, and the fund currently ranks as the sixth largest commodity focused ETP in the U.S. listed marketplace in terms of AUM, with about $306 million invested.