Three Commodity ETFs in ‘Anti-Contango’
Monday, March 22nd, 2010Michael Johnston submits:
Exchange-traded commodity products have been embraced by investors eager to add an asset class to their portfolio that has historically exhibited a low correlation to stocks and bonds. Commodity ETPs saw more than $30 billion in cash inflows last year as both funds targeting diversified baskets of resources and commodity-specific funds surged in popularity.
As the use of exchange-traded commodity products has become more common, investors have become more educated on the nuances of various strategies. While some commodity products physically buy and hold the underlying resources, the majority utilize a futures-based strategy to achieve exposure (see What Every Investor Should Know About Commodity ETF Investing). While futures-based funds exhibit a strong correlation with spot prices of the related commodities, there are other factors that can have a potentially significant impact on overall returns.
