This Day On The Street
Continue to site
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

Should You Buy the Commodities Momentum or Sell the Rally?

NEW YORK (TheStreet) -- Commodities have vastly underperformed the more traditional asset classes like stocks and bonds over the last three years. A combination of tepid global growth and below-average inflationary statistics has capped the upside of commodities futures markets.

Most investors are likely underweight exposure to this asset class, which can provide non-correlated returns in a diversified portfolio. As a result, you may have overlooked the recent surge in prices that has been steadily gaining momentum this year.

The iPath Dow Jones-UBS Commodity Index Total Return ETN (DJP) is a broad-based basket of 22 liquid commodities futures contracts that is my preferred way to monitor this space. The top five holdings in this exchange-traded note include: gold, natural gas, crude oil, corn, and copper. This fund charges an annual expense ratio of 0.75% and has nearly $1 billion in total assets.

A quick look at the chart below shows just how far DJP has gained since the beginning of the year. In fact, the total year-to-date return through the end of the first quarter is +7.35%. This handily beat the Vanguard Total Stock Market (VTI) gain of 2.06% and iShares Core U.S. Total Bond Market ETF (AGG) return of 1.77%.

Many investors consider commodities an alternative asset class because they trade on futures exchanges and face different risks than stocks or bonds. Often times these markets are more sensitive to supply and production metrics that are indicators of global demand.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr 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

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
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!
SYM TRADE IT LAST %CHG
AAPL $130.28 0.47%
FB $81.53 -1.07%
GOOG $565.06 3.30%
TSLA $218.42 -0.08%
YHOO $44.52 1.89%

Markets

DOW 18,080.14 +21.45 0.12%
S&P 500 2,117.69 +4.76 0.23%
NASDAQ 5,092.0850 +36.0220 0.71%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs