The Greenhaven Continuous Commodity Index Fund (GCC) is the latest entrant in the fast growing arena of commodity ETFs.
The fund will track the Continuous Commodity Index Total Return (CCI-TR) from Reuters. The CCI is an equal weight basket of 17 commodities including wheat, corn, soybeans, live cattle, lean hogs, gold, silver, platinum, copper, cotton, coffee, cocoa, orange juice, sugar, crude oil, heating oil, and natural gas.
Each commodity is arithmetically averaged across time and then the 17 component figures are geometrically averaged together. The continuous rebalancing method means the index constantly decreases exposure to commodity markets gaining in value and increases exposure to those markets declining in value.
Within CCI, the sector weights are: Energy 17.64 percent, grains 17.64 percent, livestock 11.76 percent, softs 29.40 percent, and metals 23.52 percent.
Over the past few years, rising inflation has boosted commodity prices and caught the attention of investors. Equities tied closely to commodities, like emerging markets and basic materials, have delivered solid performance, but don’t necessarily provide direct exposure to commodities.
The new fund will use a combination of U.S. Treasuries and futures to track the index.
Ron DeLegge is the San Diego-based editor of www.etfguide.com