Plethora of Commodities ETFs for Retail Investors

Below is the updated table of commodity mutual funds, ETFs and ETNs from the back of the paper titled, Buy the Stocks Or, Buy the Commodities? (.pdf), the subject of my recent presentation at the Hard Assets Investment Conference in Las Vegas.

A whopping 76 commodity offerings are now available to retail investors, up by about two dozen since this list was last updated back in May.
Look at the trading volume of those new leveraged funds - (DTO) (double short oil), (DGP) (double long gold), and (DZZ) (double short gold). Traders just love those things.

Comments

[Yael Pipano:]

Another one from today's Forbes (HAP):
Funny Timing For Commodity ETF
Carl Delfeld, Chartwell Advisor 09.09.08, 1:05 PM ET

row2image



Dugg on Forbes.com
The View From Alaska - Forbes.com
Chavez Nationalizes Fuel Wholesalers - Forbes.com
Rio Tinto Fails The Green Test - Forbes.com
Hollywood's Best Stars For The Buck - Forbes.com
Visit The Forbes.com Digg Channel



The newest member of the Van Eck family of exchange-traded funds is the the Market Vectors-RVE Hard Assets Producers (amex: HAP - news - people ) ETF, which tracks the Rogers-Van Eck Hard Assets Producers Index.

This Rogers-Van Eck index was developed in concert with international investor Jim Rogers, who is well-known as a strategist inclined to have significant exposure to commodities and is negative on U.S. markets and the U.S. dollar.

For the month of July, the index was down roughly 11%, consistent with the pullback in commodities. The ETF basket presently contains 321 securities, and the top 10 companies account for 34% of total assets.

Maximize your portfolio's bounce as global stocks rally and protect it best you can while the bear still prowls. Click for a free trial of Chartwell Global ETF Advisor with model portfolios and new buys.

Energy accounts for 40% of exposure, agriculture is at 30%, and industrial and precious metals have a 21% weighting. The U.S. and Canada comprise 45% of exposure, and another 34 countries account for 26%.

In an interesting twist, the company weightings are done on a global-consumption basis, rather than the conventional market-cap basis.

As much as I disagree with Rogers on the future of the U.S. market and economy, this is a solid choice for investors looking for one ETF to cover what represents 15% of global GDP.

Other good choices are the iPath Dow Jones-AIG Commodity ETN (nyse: DJP - news - people ), which has only 20% exposure to oil and precious metals. I also like using country funds for commodity exposure; for example, holding the Chile Fund (nyse: CF - news - people ) for copper exposure.

Rather than try to time commodities, investors should use allocations as core holdings offering good diversification and low correlation to equity markets. Build incrementally, since prices are likely to fall more before the next leg of the secular bull market kicks in with a global recovery.

Special Offer: Which European markets will move substantially higher? How about Asian plays besides India and China? Latin America? Click here for recommended international equity portfolios--with country ETF allocations and hedging strategies to protect your gains--in Chartwell Global ETF Advisor.

Hong Kong Surges as Democrats Hold Ground
The iShares MSCI Hong Kong (nyse: EWH - news - people ) gapped 2.8% higher at the open Monday, as pro-democracy candidates overcame low voter turnout to do better than expected in Hong Kong's Legislative Council elections Sunday, thereby retaining a critical veto power.

The pro-Beijing forces were able to maintain a majority in the legislature, in part by basking in the nationalistic glow from last month's Olympic games.

Hong Kong voters selected the legislature's 60 members, half of which are directly elected by popular vote, and half chosen by a complicated formula of "functional constituencies" representing professional interest groups, such as bankers and industry.

Only 45% of registered voters took part in this year's ballot, compared with more than 55% in the last election, which took place in 2004 amid deep dissatisfaction with the Beijing-backed government.

While low turnout is normally deadly for the pro-democracy camp, it managed to hold on to 23 seats in the elections, down from 25 four years ago. Although it is far from the majority needed to reject government legislation, it gives the democrats power to veto changes to Hong Kong's "mini constitution," the Basic Law.

Global Slowdown Clobbers Mega-Cap ETFs
Last week was a particularly rough week for global markets and for the mega-cap stocks that make up ETFs, like the iShares S&P Global 100 Index ETF (nyse: IOO - news - people ), which comprises 100 multinational companies selected based on the firm's percentage of foreign assets, revenues and employees. The average market cap is $10 billion, and the fund's holdings are split just about evenly between U.S. and international companies.

We may not technically be in a global recession, but GDP growth projections are coming down pretty much across the board on a daily basis. European companies and Japan are suffering just as much if not more than the U.S., as growth and profit numbers mirror the weakness in global consumer demand.

While the S&P 500 and the Dow each lost about 3% last week, European ETFs lost about 6.8%; Asia fell about 6.5% and Latin America gave up 9.2%. Having a fair amount in cash, trading more actively and allocating limited assets to inverse ETFs has led to the Chartwell World Country ETF Rotation being down about 4.9% year-to-date.

If the iShares S&P Global 100 Index ETF can hold two-year support near $65, it could be a great vehicle to play the coming global rebound, even if its exact arrival time is unclear.

Carl Delfeld is editor of Chartwell ETF Advisor and global strategist for New England Research & Management. Click here for international investment analysis and ETF portfolio recommendations in Chartwell ETF Advisor.

2008 Sep 10 07:34 AM

[sbenard:]

One of my favorite commodity ETFs is one that is truly unique. It takes both long and short positions in a single ETN, and is rebalanced monthly. And guess what? While most long commodity funds are down over the past 2 months, this one is higher. The symbol is LSC.

2008 Sep 10 07:55 PM