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Dion's Weekly ETF Blog Wrap

Stocks in this article: DBA JJC VWO

There are plenty of reasons why investors should be wary of certain futures-backed single commodity funds (like the United States Natural Gas ETF (UNG) and the United States Oil ETF (USO), but the breadth of DBA's underlying basket helps to mitigate many of these concerns. PowerShares has proven to be proactive in structuring funds in order to attempt to stay within position limitations. That being said, DBA is certainly a fund designed with a more sophisticated investor in mind.

DBA should prove to be profitable in both the short term and the long haul. News of today's report and the imminent food-price crisis should help to lift DBA in the sessions ahead, while longer-term concerns about restoring crops and meeting the demands of a growing global population should help to drive DBA higher over time. Keep an eye on this large, liquid agriculture ETF in the days ahead.

At the time of publication, Dion Money Management was long DBA.


Keep an Eye on Copper

Published 1/03/2011 7:17 a.m. EST

It's been hard to miss the dramatic jump in copper prices during the past month, and the corresponding jump in the price of the iPath DJ-UBS Copper ETN (JJC) has been staggering. During the month of December, JJC rose nearly 17%.

While some of this increase is certainly due to a recovering economy and increased activity among homebuilders, some investors have pointed the finger at several hotly anticipated copper ETFs. Blackrock's iShares ETF line, JPMorgan and ETF Securities have all filed with the SEC to launch copper funds. Some of the upcoming funds promise to be physically backed, like the rapidly expanding and well-known SPDR Gold Shares ETF (GLD).

In November, JPMorgan purchased approximately $1.5 billion worth of copper, a necessary step in the creation of a copper fund. During the period that JPMorgan made the purchases, copper prices rose several percentage points. While none of the funds have launched yet, investors can expect to see more activity in both the market for physical copper and the market for copper futures contracts as these issuers prepare to launch the new funds.

Will this activity alone affect the price of copper in the months ahead as issuers stockpile the commodity in anticipation of fund launches? In the past, regulators have kept an increasingly close watch on funds like the U.S. Natural Gas ETF (UNG) and the U.S. Oil ETF (USO), as these funds were blamed for the rising price of their respective commodities. JPMorgan traders are also being investigated about manipulating silver prices, so I'm sure that regulators are going to keep a close eye on any copper funds that are launched in upcoming months.

Investors are becoming accustomed to using ETFs to gain exposure to commodities, and more sophisticated investors are eager to move beyond gold and silver to other precious metals and base metals. I'd recommend JJC to sophisticated investors in the months ahead, and the upcoming physically backed copper ETFs will be even better for everyday investors. The speculation over copper and copper prices and the new funds should help to fuel copper in the months ahead, and this should help to keep JJC's trajectory on upswing. JJC is certainly a fund to watch.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

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