A Dynamic Commodity ETF Strategy Without Pesky K-1

Commodities ETFs and other funds that use futures contracts to gain exposure to a market are structured as limited partnerships. Consequently, investors have to fill out a Schedule K-1 instead of Form 1099. The actively managed SDCI is structured as normal 1940 Act fund, so the ETF enjoys the favorable and easy to file tax treatment many investors are accustomed to and still allows investors to access the broad commodities market.

“We are excited to build on our long-term collaboration with USCF and to leverage the great success of our other funds,” Ashraf Rizvi, Partner of SummerHaven, said in a note. “This new Fund utilizes the established SummerHaven Dynamic Commodity Index as its benchmark, providing an attractive commodity ETF with no K-1 for investors.”

As investors look to diversify away from the ongoing market risks, Love argued that people should consider commodity exposure. He believed that investors are overlooking the diversification and hedging opportunity that commodities may provide, especially as they have historically generated relative low correlations to traditional assets like stocks and bonds.

Furthermore, with a growing global economic outlook that could fuel demand for raw materials and rising inflationary pressures due to an expanding economy, commodities can be a good way for investors to add another layer of diversification to a traditional portfolio mix, Love argued.

For more information on new fund products, visit our new ETFs category.