Commodities ETF Sidesteps the Hassles

NEW YORK (TheStreet) -- Investment firm Jefferies just released the Thomson-Reuters Jefferies Commodity Equity Index Fund(CRBQ), an exchange traded fund that, curiously, doesn't own commodities or commodities futures.

The ETF owns shares of companies that produce commodities, such as miners and oil firms. The fund avoids the hassles of both futures position limits, which have been a concern for the United States Natural Gas Fund(UNG), and the physical ownership of metals.

The fund determines the weighting of its constituent stocks by the value of resources produced, not market value. Energy comprises 39% of the fund, agriculture 38%, base metals 14% and precious metals 8.7%.

The three largest holdings are Monsanto(MON), which accounts for 7.3% of the ETF, ExxonMobil(XOM), 5.9%, and Potash(POT), 4.6%. There are 145 stocks in all, which, if nothing else, provides a list of companies to learn about for individual investment.

The country weightings hold some appeal. The U.S. is the largest, at 37% of the fund. Canada is second, with 14%. It's somewhat surprising that Australia takes up only 2.1%. Still, the fund owns the U.K. listings of BHP Billiton(BHP) and Rio Tinto(RTP). If those names are thought of as Australian stocks, which they can be, the allocation goes up to 5.2%, which is better but still seems light for such a big player. The same idea applies to Brazil's 3.5% weighting and South Africa's 2%.

The reason to pick on the country weightings is that anyone who's done any fundamental research on the materials sector knows that Australia and Brazil are playing big roles in the mining and movement of resources used to build up the emerging world's infrastructure. I would want a broad-based commodity product to have more exposure to commodity-based economies.