This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

A Steadier Way to Hold Commodities

Stocks in this article: SLV WEAT GLD DBC GSG GCC

Among the most broadly diversified funds is GreenHaven Continuous Commodity Index (GCC). Instead of emphasizing some sectors, GreenHaven gives equal weight to each of 17 different commodities. Under this scheme, cocoa has as much impact as crude oil.

Lately, the equal-weight approach has been working. This year, GreenHaven has lost -5.9%, ranking as the top-returning broad-basket commodity ETF. During the past five years, the fund has lost 4.7% annually, compared to an annualized loss of 13.8% for energy-heavy iShares S&P GSCI.

Spencer Bogart, an ETF analyst for IndexUniverse, recommends the Greenhaven fund for investors seeking a diversified approach. But he argues that there are legitimate reasons for investors to prefer an energy-heavy fund. "If you spend a lot of money on energy, then you may want to hedge your exposure by holding a fund that will go up when oil prices rise," he says.


Some investors were disillusioned with commodities funds because of their poor showing during the financial crisis. In the turmoil of 2008, the S&P 500 dropped 37%, and the S&P GSCI ETF did even worse, losing 45.8%. Critics said that commodities funds no longer provided the kind of diversification that they offered in the past.

Since the financial crisis, commodities have begun showing lower correlations with stocks. So there is good reason to expect that broad-based ETFs can provide important diversification in future markets.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Stan Luxenberg is a freelance writer specializing in mutual funds and investing. He was executive editor of Individual Investor magazine.
2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,387.21 -291.49 -1.65%
S&P 500 2,029.55 -27.54 -1.34%
NASDAQ 4,681.4970 -90.2660 -1.89%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs