With 2011 just starting, many of you are taking a look back at your current investments and looking for ways to improve your portfolio in order to optimize your return in 2011. Commodities have been gaining importance among asset classes in the past few years and ETFs have been a great way to gain exposure easily.
Why are commodities gaining importance?With the emergence of countries like China and Brazil, it is becoming very difficult for these countries to keep up the growth without importing and buying huge quantities of energy sources, metals, food, etc. Oil and Gold are certainly the better known commodities and get most of the attention but if you have been tracking commodities in the past year, you know that they have not been the best performing commodities.
The other big reason of course is that investing in commodities used to be very complex and expensive but with the explosion of ETFs, buying exposure in almost any commodity is fairly easy and adds more diversification to your portfolio. Also, since very few expect demand for these commodities to diminish anytime soon, it does look like an asset class that should be added to most portfolios.
Before getting started, let’s take a look at the top commodity ETFs in 2010:
| Ticker | Name | Market Cap | Price | Return YTD | Fees | 1Y Return | Dividend Yield |
|---|---|---|---|---|---|---|---|
| AGQ | ProShares Ultra Silver | 555067200 | 158.59 | 174.746 | 0.95 | 175.63 | 0 |
| SLV | iShares Silver Trust | 10822550000 | 30.18 | 79.938 | 0.5 | 80.036 | 0 |
| SIVR | ETFS Silver Trust | 513191000 | 30.73 | 79.609 | 0.3 | 80.036 | 0 |
| DBS | PowerShares DB Silver Fund | 207140200 | 54.51 | 78.897 | 0.75 | 79.254 | 0 |
| USV | E-TRACS UBS Bloomberg CMCI Silver ETN | 7047984 | 44.0499 | 77.335 | 0.4 | 79.896 | 0 |
| GDXJ | Market Vectors Junior Gold Miners ETF | 2114170000 | 39.89 | 64.343 | 0.59 | 65.63 | 7.34 |
| JO | iPath Dow Jones-UBS Coffee Subindex Total Return ETN | 34210890 | 64.032 | 63.404 | 0.75 | 63.488 | 0 |
| DGP | PowerShares DB Gold Double Long ETN | 536625000 | 42.93 | 58.434 | 0.75 | 59.581 | 0 |
| UYM | ProShares Ultra Basic Materials | 368478800 | 50.65 | 57.091 | 0.95 | 53.008 | 0.09 |
| JJT | iPath Dow Jones-UBS Tin Subindex Total Return ETN | 33478320 | 63.3699 | 56.989 | 0.75 | 58.94 | 0 |
| UGL | ProShares Ultra Gold | 265201000 | 70.72 | 54.454 | 0.95 | 55.428 | 0 |
| ERX | Direxion Daily Energy Bull 3X Shares | 242568500 | 58.45 | 48.57 | 0.95 | 44.28 | 0.35 |
| JJP | iPath Dow Jones-UBS Precious Metals Subindex Total Return ETN | 28467870 | 81.64 | 40.327 | 0.75 | 39.768 | 0 |
| PXE | PowerShares Dynamic Energy Exploration & Production Portfolio | 76131000 | 23.07 | 40.049 | 0.63 | 38.298 | 0.52 |
| DBP | PowerShares DB Precious Metals Fund | 404198100 | 51.82 | 36.076 | 0.75 | 36.511 | 0 |
| JJA | iPath Dow Jones-UBS Agriculture Subindex Total Return ETN | 142131900 | 63.07 | 35.895 | 0.75 | 36.02 | 0 |
| XME | SPDR S&P Metals & Mining ETF | 1220861000 | 68.78 | 34.601 | 0.35 | 33.055 | 0.54 |
| PSAU | PowerShares Global Gold and Precious Metals Portfolio | 67513500 | 50.01 | 34.082 | 0.75 | 35.179 | 1.86 |
| DIG | ProShares Ultra Oil & Gas | 357318000 | 45.81 | 33.307 | 0.95 | 30.993 | 0.51 |
| FUE | ELEMENTS Linked to the MLCX Biofuels Index Total Return | 2829600 | 11.79 | 33.294 | 0.75 | 33.137 | 0 |
As you can see, the race wasn’t really close as silver dominated.
Futures or Physical based?We discussed the subject very recently and while there is no easy answer that applies to all commodities, I think it’s important to consider this when selecting a commodity ETF.
Largest ETFs?One of the easy ways to look for good ETFs is to take a look at the largest ETFs. While following the crowd is not always the best way to do things, it can give you a good idea of ETFs.. here are the commodity ETFs that have over $1 billion in assets:
| Ticker | Name | Market Cap | Price | Return YTD | Fees | 1Y Return | Dividend Yield |
|---|---|---|---|---|---|---|---|
| GLD | SPDR Gold Shares | $58,498,220,000.00 | $138.72 | 27.70 | 0.4 | 28.149 | 0 |
| SLV | iShares Silver Trust | $10,822,550,000.00 | $30.18 | 79.94 | 0.5 | 80.036 | 0 |
| GDX | Market Vectors - Gold Miners ETF | $7,613,213,000.00 | $61.47 | 32.63 | 0.53 | 33.612 | 0.65 |
| IAU | iShares Gold Trust | $5,378,605,000.00 | $13.90 | 27.78 | 0.25 | 28.2 | 0 |
| DBC | PowerShares DB Commodity Index Tracking Fund | $5,102,261,000.00 | $27.55 | 9.83 | 0.85 | 9.518 | 0 |
| DJP | iPath Dow Jones-UBS Commodity Index Total Return ETN/United States | $2,853,541,000.00 | $49.12 | 14.22 | 0.75 | 14.06 | 0 |
| UNG | United States Natural Gas Fund LP | $2,759,685,000.00 | $5.99 | (41.57) | 0.6 | -43.092 | 0 |
| DBA | PowerShares DB Agriculture Fund | $2,710,931,000.00 | $32.35 | 20.46 | 0.85 | 20.965 | 0 |
| MOO | Market Vectors - Agribusiness ETF | $2,604,721,000.00 | $53.54 | 22.60 | 0.56 | 21.905 | 0.61 |
| OIH | Oil Services Holders Trust | $2,221,372,000.00 | $140.53 | 20.20 | 0 | 19.223 | 1.65 |
| GDXJ | Market Vectors Junior Gold Miners ETF | $2,114,170,000.00 | $39.89 | 64.34 | 0.59 | 65.63 | 7.34 |
| USO | United States Oil Fund LP | $1,821,300,000.00 | $39.00 | (2.95) | 0.45 | -2.606 | 0 |
| GSG | iShares S&P GSCI Commodity Indexed Trust | $1,797,070,000.00 | $34.10 | 5.19 | 0.75 | 5.617 | 0 |
| VDE | Vanguard Energy ETF | $1,539,251,000.00 | $99.67 | 21.20 | 0.25 | 20.175 | 1.25 |
| IXC | iShares S&P Global Energy Sector Index Fund | $1,318,275,000.00 | $39.06 | 11.20 | 0.48 | 10.609 | 1.84 |
| XME | SPDR S&P Metals & Mining ETF | $1,220,861,000.00 | $68.78 | 34.60 | 0.35 | 33.055 | 0.54 |
| SGOL | ETFS Gold Trust | $1,166,468,000.00 | $141.39 | 27.70 | 0.39 | 28.113 | 0 |
| IYM | iShares Dow Jones US Basic Materials Sector Index Fund | $1,115,424,000.00 | $77.46 | 30.83 | 0.47 | 29.421 | 1.12 |
Both oil and natural gas have been very volatile in recent years, making it very difficult for investors. I would personally stay away from oil at the moment but here are some options if you are interested:
| Ticker | Name | Market Cap | Price | Return YTD | Fees | 1Y Return | Dividend Yield |
|---|---|---|---|---|---|---|---|
| OIH | Oil Services Holders Trust | $2,221,372,000.00 | $140.53 | 20.20 | 0 | 19.223 | 1.65 |
| XES | SPDR S&P Oil & Gas Equipment & Services ETF | $455,204,000.00 | $36.71 | 30.11 | 0.35 | 29.16 | 0.86 |
| USO | United States Oil Fund LP | $1,821,300,000.00 | $39.00 | (2.95) | 0.45 | -2.606 | 0 |
| DBO | PowerShares DB Oil Fund | $598,265,100.00 | $28.22 | 0.18 | 0.75 | 0.254 | 0 |
| DIG | ProShares Ultra Oil & Gas | $357,318,000.00 | $45.81 | 33.31 | 0.95 | 30.993 | 0.51 |
| DDG | ProShares Short Oil & Gas | $12,114,040.00 | $40.38 | (21.08) | 0.95 | -20.836 | 0 |
| PXJ | PowerShares Dynamic Oil & Gas Services Portfolio | $199,744,500.00 | $21.83 | 28.89 | 0.63 | 28.012 | 0.36 |
| BNO | United States Brent Oil Fund LP | $12,490,000.00 | $62.45 | N/A | N/A | N/A | 0 |
| DNO | United States Short Oil Fund LP | $8,084,000.00 | $40.42 | (5.99) | 0.96 | -6.226 | 0 |
| IEZ | iShares Dow Jones US Oil Equipment & Services Index Fund | $495,880,000.00 | $56.35 | 31.56 | 0.47 | 30.651 | 0.5 |
| IEO | iShares Dow Jones US Oil & Gas Exploration & Production Index Fund | $427,795,000.00 | $63.85 | 18.55 | 0.48 | 17.328 | 0.28 |
| DTO | PowerShares DB Crude Oil Double Short ETN | $120,035,200.00 | $53.35 | (15.96) | 0.75 | -16.339 | 0 |
| DUG | ProShares UltraShort Oil & Gas | $85,871,190.00 | $37.42 | (41.13) | 0.95 | -39.997 | 0 |
| OLO | PowerShares DB Crude Oil Long ETN | $18,200,000.00 | $14.00 | 0.16 | 0.75 | 0.274 | 0 |
| SZO | PowerShares DB Crude Oil Short ETN | $7,975,800.00 | $44.31 | (5.52) | 0.75 | -5.913 | 0 |
| UHN | United States Heating Oil Fund LP | $11,944,000.00 | $29.86 | 5.65 | 0.69 | 5.65 | 0 |
| USL | United States 12 Month Oil Fund LP | $176,710,000.00 | $43.10 | 4.35 | 0.6 | 4.247 | 0 |
| OIL | iPath Goldman Sachs Crude Oil Total Return Index ETN | $643,443,800.00 | $25.61 | (3.17) | 0.75 | -2.868 | 0 |
| UCO | ProShares Ultra DJ-UBS Crude Oil | $274,265,400.00 | $12.50 | (5.52) | 0.95 | -5.146 | 0 |
| SCO | ProShares UltraShort DJ-UBS Crude Oil | $138,312,100.00 | $10.17 | (22.27) | 0.95 | -22.611 | 0 |
And some natural gas ones:
| Ticker | Name | Market Cap | Price | Return YTD | Fees | 1Y Return | Dividend Yield |
|---|---|---|---|---|---|---|---|
| UGA | United States Gasoline Fund LP | $67,369,600.00 | $42.11 | 12.47 | 0.6 | 12.682 | 0 |
| XES | SPDR S&P Oil & Gas Equipment & Services ETF | $455,204,000.00 | $36.71 | 30.11 | 0.35 | 29.16 | 0.86 |
| DIG | ProShares Ultra Oil & Gas | $357,318,000.00 | $45.81 | 33.31 | 0.95 | 30.993 | 0.51 |
| DDG | ProShares Short Oil & Gas | $12,114,040.00 | $40.38 | (21.08) | 0.95 | -20.836 | 0 |
| UNG | United States Natural Gas Fund LP | $2,759,685,000.00 | $5.99 | (41.57) | 0.6 | -43.092 | 0 |
| FCGL | Direxion Daily Natural Gas Related Bull 2X Shares | $5,765,058.00 | $57.65 | N/A | 0.95 | N/A | 0.09 |
| FCGS | Direxion Daily Natural Gas Related Bear 2X Shares | $2,482,015.00 | $24.82 | N/A | 0.95 | N/A | 0 |
| PXJ | PowerShares Dynamic Oil & Gas Services Portfolio | $199,744,500.00 | $21.83 | 28.89 | 0.63 | 28.012 | 0.36 |
| IEO | iShares Dow Jones US Oil & Gas Exploration & Production Index Fund | $427,795,000.00 | $63.85 | 18.55 | 0.48 | 17.328 | 0.28 |
| DUG | ProShares UltraShort Oil & Gas | $85,871,190.00 | $37.42 | (41.13) | 0.95 | -39.997 | 0 |
| GAZ | iPath Dow Jones-UBS Natural Gas Subindex Total Return ETN | $121,572,700.00 | $8.05 | (43.98) | 0.75 | -45.13 | 0 |
| MLPG | UBS E-TRACS Alerian Natural Gas MLP Index ETN | $11,540,000.00 | $28.85 | N/A | 0.85 | N/A | 1.24 |
| FCG | First Trust ISE-Revere Natural Gas Index Fund | $398,520,100.00 | $19.68 | 11.92 | 0.6 | 10.225 | 0.25 |
| UNL | United States 12 Month Natural Gas Fund LP | $38,467,000.00 | $34.97 | (36.61) | 0.75 | -37.265 | 0 |
There is a lot of speculation about gold and where it is headed in 2011 and beyond. Some expect the price to double while others still have a lot of doubt. Here are some ETFs:
| Ticker | Name | Market Cap | Price | Return YTD | Fees | 1Y Return | Dividend Yield |
|---|---|---|---|---|---|---|---|
| GLD | SPDR Gold Shares | $58,498,220,000.00 | $138.72 | 27.70 | 0.4 | 28.149 | 0 |
| SGOL | ETFS Gold Trust | $1,166,468,000.00 | $141.39 | 27.70 | 0.39 | 28.113 | 0 |
| OIL | iPath Goldman Sachs Crude Oil Total Return Index ETN | $643,443,800.00 | $25.61 | (3.17) | 0.75 | -2.868 | 0 |
| IAU | iShares Gold Trust | $5,378,605,000.00 | $13.90 | 27.78 | 0.25 | 28.2 | 0 |
| GLDX | Global X Gold Explorers ETF | $24,700,000.00 | $19.00 | N/A | 0.65 | N/A | 0 |
| DGP | PowerShares DB Gold Double Long ETN | $536,625,000.00 | $42.93 | 58.43 | 0.75 | 59.581 | 0 |
| DGL | PowerShares DB Gold Fund | $331,058,000.00 | $50.16 | 26.39 | 0.75 | 26.81 | 0 |
| DZZ | PowerShares DB Gold Double Short ETN | $97,755,000.00 | $7.98 | (41.58) | 0.75 | -42.038 | 0 |
| DGZ | PowerShares DB Gold Short ETN | $28,804,000.00 | $15.16 | (23.15) | 0.75 | -23.453 | 0 |
| UGL | ProShares Ultra Gold | $265,201,000.00 | $70.72 | 54.45 | 0.95 | 55.428 | 0 |
| GDX | Market Vectors - Gold Miners ETF | $7,613,213,000.00 | $61.47 | 32.63 | 0.53 | 33.612 | 0.65 |
| PSAU | PowerShares Global Gold and Precious Metals Portfolio | $67,513,500.00 | $50.01 | 34.08 | 0.75 | 35.179 | 1.86 |
| SPGH | UBS E-TRACS S&P 500 Gold Hedged ETN | $15,024,000.00 | $37.56 | N/A | N/A | N/A | 0 |
| GLL | ProShares UltraShort Gold | $76,169,240.00 | $27.80 | (45.01) | 0.95 | -45.217 | 0 |
| GDXJ | Market Vectors Junior Gold Miners ETF | $2,114,170,000.00 | $39.89 | 64.34 | 0.59 | 65.63 | 7.34 |
| UBG | E-TRACS UBS Bloomberg CMCI Gold ETN | $6,120,000.00 | $38.25 | 27.59 | 0.3 | 26.359 | 0 |
Personally, I prefer sticking to commodities that have the most “real” use and would go long Silver despite its incredible run in 2010. Also, going long Agriculture and broad commodity ETFs. Here are some of those I will consider:
| Ticker | Name | Market Cap | Price | Return YTD | Fees | 1Y Return | Dividend Yield |
|---|---|---|---|---|---|---|---|
| SIVR | ETFS Silver Trust | $513,191,000.00 | $30.73 | 79.61 | 0.3 | 80.036 | 0 |
| SLV | iShares Silver Trust | $10,822,550,000.00 | $30.18 | 79.94 | 0.5 | 80.036 | 0 |
| SIL | Global X Silver Miners ETF | $367,611,500.00 | $27.13 | N/A | 0.65 | N/A | 0.89 |
| DBS | PowerShares DB Silver Fund | $207,140,200.00 | $54.51 | 78.90 | 0.75 | 79.254 | 0 |
| AGQ | ProShares Ultra Silver | $555,067,200.00 | $158.59 | 174.75 | 0.95 | 175.63 | 0 |
| ZSL | ProShares UltraShort Silver | $94,565,750.00 | $9.82 | (78.94) | 0.95 | -78.891 | 0 |
| Ticker | Name | Market Cap | Price | Return YTD | Fees | 1Y Return | Dividend Yield |
|---|---|---|---|---|---|---|---|
| FUD | E-TRACS UBS Bloomberg CMCI Food ETN | $10,519,880.00 | $29.23 | 29.28 | 0.65 | 29.923 | 0 |
| DBA | PowerShares DB Agriculture Fund | $2,710,931,000.00 | $32.35 | 20.46 | 0.85 | 20.965 | 0 |
| DAG | PowerShares DB Agriculture Double Long ETN | $75,274,500.00 | $14.07 | 25.58 | 0.75 | 25.116 | 0 |
| AGF | PowerShares DB Agriculture Long ETN | $4,548,320.00 | $20.96 | 16.32 | 0.75 | 15.661 | 0 |
| AGA | PowerShares DB Agriculture Double Short ETN | $2,718,604.00 | $18.00 | (43.94) | 0.75 | -44.779 | 0 |
| ADZ | PowerShares DB Agriculture Short ETN | $2,393,100.00 | $23.93 | (21.32) | 0.75 | -21.166 | 0 |
| PAGG | PowerShares Global Agriculture Portfolio | $68,864,490.00 | $32.03 | 20.58 | 0.75 | 20.267 | 0.95 |
| CRBA | Jefferies TR/J CRB Agriculture Equity Index Fund | $5,321,500.00 | $53.22 | 27.08 | 0.65 | 26.91 | 1.34 |
| JJA | iPath Dow Jones-UBS Agriculture Subindex Total Return ETN | $142,131,900.00 | $63.07 | 35.90 | 0.75 | 36.02 | 0 |
| UAG | E-TRACS UBS Bloomberg CMCI Agriculture ETN | $8,907,200.00 | $30.40 | 32.10 | 0.65 | 34.556 | 0 |
| RJA | ELEMENTS Linked to the Rogers International Commodity Index - Agri Tot Return | $520,456,000.00 | $10.72 | 33.25 | 0.75 | 33.42 | 0 |
| Ticker | Name | Market Cap | Price | Return YTD | Fees | 1Y Return | Dividend Yield |
|---|---|---|---|---|---|---|---|
| DBC | PowerShares DB Commodity Index Tracking Fund | $5,102,261,000.00 | $27.55 | 9.83 | 0.85 | 9.518 | 0 |
| GSG | iShares S&P GSCI Commodity Indexed Trust | $1,797,070,000.00 | $34.10 | 5.19 | 0.75 | 5.617 | 0 |
| DJP | iPath Dow Jones-UBS Commodity Index Total Return ETN/United States | $2,853,541,000.00 | $49.12 | 14.22 | 0.75 | 14.06 | 0 |
| GCC | GreenHaven Continous Commodity Index Fund | $535,437,500.00 | $32.95 | 23.24 | 0.85 | 22.957 | 0 |
Disclosure: No positions in these commodity ETFs
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