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Commodities: ETFs vs. Mutual Funds

NEW YORK ( TheStreet) -- Both ETF issuers and mutual fund companies are vying for investors in commodities. Investors looking for exposure to the broad commodities sector can now choose from active or passive management and futures or equities-based strategies.

When comparing commodity ETFs and commodity mutual funds, the fundamental differences should certainly be considered. While ETFs trade throughout the trading day, mutual funds are generally priced just once. Passive ETF strategies are generally lower-priced than active mutual funds.

While an active trader should use ETFs to easily trade in and out of the commodities sector during trading sessions, long-term investors may prefer the oversight provided by mutual fund managers.

Equities-Based Funds

Equities-based commodity ETFs and mutual funds track the stocks of commodities producers. Rather than tracking the physical commodities themselves, these funds track companies that are involved in the commodities business.

The Fidelity Global Commodities (FFGXC) mutual fund, Jefferies Global Commodity ETF (CRBQ) and Market Vectors Hard Assets Producers ETF (HAP) all track large, global, commodities producers. All three funds count Monsanto (MON - Get Report), Exxon Mobil (XOM - Get Report), Potash (POT - Get Report), Syngenta and Chevron (CVX - Get Report) among their top 10 holdings.

While the three funds may share similar holdings, there are differences in fees, size and track record. HAP, launched in August of 2008, is the oldest of the bunch. Fidelity's FFGCX was introduced in March of 2009, while CRBQ recently began trading in September of 2009.

CRBQ has an expense ratio of 0.65%, while HAP and FFGCX have expense ratios of 0.75% and 1.75% respectively. When it comes to concentration, the top 10 holdings in CRBQ, HAP and FFGCX account for 37%, 33% and 27% of those funds' assets respectively.
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GSG $14.71 -1.70%
HAP $30.16 -2.80%
CVX $101.35 -1.90%
MON $93.87 -1.90%
POT $16.88 -3.50%


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