Commodity ETFs have enjoyed greater investment interest this year as a recovery in oil prices and resurgence in safe-haven gold bets helped attract steady inflows.
However, that scenario could be challenged if the recent rally in the U.S. dollar continues.
Still, investors should main some exposure to alternative asset classes, such as commodities. A diversified approach is suitable for some that do not want to attempt to time upside in popular commodities such as gold, oil and silver.
SEE MORE: A Bright Precious Metals ETF Outlook
The PowerShares DB Commodity Index Tracking Fund (NYSEArca: DBC), which offers exposure to multiple commodities, has been a solid performer this year, too. Another name in the diversified commodities ETF group to consider is the iShares S&P GSCI Commodity-Indexed Trust (NYSEArca: GSG).
On the supply side, U.S. crude oil production is faltering, which has helped support crude prices. Moreover, the depreciating U.S. dollar has helped support demand for commodities as an alternative hard asset or a better store of wealth.
Commodities were the best performing asset class of the first half of the year, outperforming global bonds and equities. The Bloomberg Commodity Index was up over 14% over the first six months of 2016.
DBC is “comprised of futures contracts on fourteen of the most heavily traded physical commodities, and as you can see from the chart below, recent weakness has sent the price of the fund toward the long-term support of its 200-day moving average. In technical analysis, the 200-day moving average is one of the most significant levels that is used to determine the long-term direction of the trend, and the recent close near $14.35 is creating one of the most lucrative risk/reward setups of 2016,” according to Investopedia.
SEE MORE: Commodity ETFs in Bull Market for First Time in Four Years
DBC currently features exposure to about 15 commodities. Those include heavily traded commodities such as gold, silver and West Texas Intermediate oil futures, as well as more obscure commodities fare such as sugar, wheat and zinc.
For more information on the commodities market, visit our commodity ETFs category.
PowerShares DB Commodity Index Tracking Fund
