As the interest in commodity investments grows, ETF providers are trying to meet that demand. The Greenhaven Continuous Commodity Index Fund (GCC) is the latest entrant into the fast growing arena of commodity ETFs.
The fund will track the Continuous Commodity Index Total Return (CCI-TR) from Reuters. The CCI-TR 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 assigned a 5.88 percent index weight and rebalanced daily.
Within CCI-TR, 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.
Even though GCC will compete with more established commodity ETFs, like the PowerShares DB Commodity Index Tracking Fund (DBC) and the iShares S&P GSCI Commodity Indexed Trust (GSG), it uses a different index strategy than its competitors.
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.