Commodity ETFs Avoid Regulatory Hassles

NEW YORK (TheStreet) -- In an effort to avoid the regulatory uncertainty plaguing many popular futures-based commodity funds, Jefferies (JEF) has continued to expand its equity-based commodity ETFs with two new fund offerings.

The Jefferies TR/J CRB Global Agriculture Equity Index Fund (CRBA) and the Jefferies TR/J CRB Global Industrial Metals Equity Index Fund (CRBI) began trading yesterday, following in the footsteps of Jefferies' first commodity ETF, the Jefferies TR/J CRB Global Commodity Equity Index Fund (CRBQ). (New Commodity ETF Skirts Limits)

CRBA and CRBI are actually slices of Jefferies' original CRBQ, which launched earlier this month. CRBQ has already attracted a robust average daily trading volume of 67,000 shares, a testament to the growing interest in commodities.

CRBA has a 0.65% expense ratio and tracks a basket of firms that derive their business from agriculture. Top holdings include Deere & Co. (DE), Potash of Saskatchewan (POT) and Archer Daniels Midland (ADM). CRBA's underlying portfolio includes 34 global agriculture companies, with America as the largest country allocation, at 48%.

The new metals offering, CRBI, tracks 34 global equities and also has an expense ratio of 0.65%. Top holdings in CRBI's underlying portfolio include Anglo American (AAL.LN), Rio Tinto (RTP) and BHP Billiton (BHP).

Jefferies' new equity-based ETFs will skirt some of the problems recently experienced by their futures-based peers. The Commodities Futures Trading Commission will be handing down new regulatory limits on futures positions, effectively limiting the size of ETFs that track to-be-regulated futures contracts.( ETF Regulation Battle Bad for Investors)

Ahead of the regulation, ETFs like United States Natural Gas (UNG) and PowerShares DB Commodity (DBC) have restructured their portfolios to stay within futures contracts limitations. Across the spectrum of futures-based funds, the upcoming regulation has caused disruptions in creation of new shares and portfolio strategy. (Commodity ETF Rebuilt)

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