Baum singled out the United States Commodity Index Fund (NYSEArca: USCI) as a prudent way for advisors to gain broad access to the commodities asset class.
USCI eschews rolling front month contracts, which can lead to underperformance, especially in a contangoed market, rebalancing each month and selecting the most-backdated contracts and then the seven highest-returning contracts.
Specifically, the commodities ETF tries to reflect the performance of the SummerHaven Dynamic Commodity Index Total Return Index, which consists of 14 commodity futures. The index is reformulated each month from 27 possible futures contracts. The 14 selected contracts are equally weighted and represent six sectors: Energy (WTI crude oil, Brent crude oil, natural gas, heating oil, gasoil, RBOB gasoline), Precious Metals (gold, silver, platinum), Industrial Metals (aluminum, copper, lead, nickel, tin, zinc), Grains (corn, soybeans, soybean meal, soybean oil, wheat), Livestock (live cattle, feeder cattle, lean hogs) and Softs (coffee, cocoa, cotton and sugar).
The portfolio currently consists of the following futures contracts: Gas Oil JAN 19, Live Cattle APR19, Zinc JAN18, Heating Oil APR19, Corn DEC19, Gold FEB19, Unleaded Gasoline (RBOB) FEB19, Wheat MAR19, Cocoa MAR19, Natural Gas MAY19, Copper NOV19, Cotton MAR19, Feeder Cattle JAN19 and Aluminum JAN19.
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