Seven New Commodity ETFs Hit AMEX
By Nathan Becker
05 Jan 2007 at 04:08 PM EST
resourceinvestor.com
St. LOUIS (ResourceInvestor.com) -- Last year, investors saw groundbreaking advancements in commodity ETFs. They witnessed the launch of the world's first silver-backed ETF [AMEX:SLV], the first U.S. crude ETF [AMEX:USO], the first gold miners ETF [AMEX:GDX], the first steel miners ETF [AMEX:SLX] and even rumours of a platinum ETF.
Today, Deutsche Bank and PowerShares' planned ETFs became more than just rumours, as the two financial institutions teamed up to launch seven new commodity ETFs on the American Stock Exchange.
The funds, which track commodity prices, are based on versions of the Deutsche Bank Liquid Commodity Index subindices to minimize the negative impact of contango - a condition that could cost investors when they roll over their positions into new contracts if their next-to-expire futures contract is trading at a lower price.
The funds also seek to and maximize the pluses of backwardization, when the next-to-expire contract is trading at a higher price than ones that expire later.
According to DB's prospectus, the ETFs launched today are as follows:
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PowerShares DB Agriculture Fund [AMEX:DBA]
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PowerShares DB Base Metals Fund [AMEX:DBB]
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PowerShares DB Energy Fund [AMEX:DBE]
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PowerShares DB Oil Fund [AMEX:DBO]
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PowerShares DB Precious Metals Fund [AMEX:DBP]
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PowerShares DB Silver Fund [AMEX:DBS]
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PowerShares DB Gold Fund [AMEX:DGL]
"These commodity-linked investment products accommodate a growing demand from investors that are seeking alternative asset categories to complement their investment portfolios," Cliff Weber, Senior Vice President of the ETF Marketplace, said in a press release.
The funds will enter into long exchange-traded commodity futures positions, and they will earn interest on collateral U.S. Treasuries securities as well as cash.
ETFs made a big splash in 2006, especially natural resource-based funds and non-U.S. funds. PowerShares, a popular ETF provider, had one of its funds, the PowerShares Golden Dragon Halter USX China [AMEX:PGJ], turn in one of the top-five ETF performances of 2006, when it posted a 55% return, according to The Motley Fool.
Analysts at the site say that if an investor is looking for an outstanding return, non-U.S. investment is probably the way to go since Europe and Asia are playing bigger roles in the global economy.
Tom Lydon, an analyst for ETFtrends.com, said investors have every reason to be optimistic about the funds looking into 2007.
"The evolution of ETFs sped up significantly in the last year alone - as improving opportunities for jumping into tailor-made sectors that can pack a punch in the way of concentration, while enabling investors to diversify across a wide-array of stocks," Lydon said. "The selection is vast and exciting. While new ETFs pop up weekly, their evolution is still just beginning."
No first-day jitters
In their opening day on the AMEX, the PowerShares DB ETFs looked solid, with all but one of the new funds rising from its opening price.
The Agriculture Fund began the day at $24.93 and, as of publishing time, was last traded at $25.02. The Base Metals Fund opened at $24.10 and last traded at $23.71. The Energy Fund opened at $24.10 and last traded at $24.19, the Oil Fund opened at $23.99 and last traded at $24.27, and the Silver Fund opened at $24.02 and last traded at $24.17. The Gold Fund opened at $23.97, and last traded at $24.12.
The only new fund to not gain on its opening day so far was the Precious Metals Fund, which opened at $24.08 and last traded at $24.04. |
