Top 2011 Commodity ETF’s

By: ispeculatornew
Date posted: 01.03.2011 (7:00 am) | Write a Comment  (1 Comment)

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With 2011 just starting, many of you are taking a look back at your current investments and looking for ways to improve your portfolio in order to optimize your return in 2011. Commodities have been gaining importance among asset classes in the past few years and ETF’s have been a great way to gain exposure easily.

Why are commodities gaining importance?

With the emergence of countries like China & Brazil, it is becoming very difficult for these countries to keep up the growth without importing and buying huge quantities of energy sources, metals, food, etc. Oil and Gold are certainly the better known commodities and get most of the attention but if you have been tracking commodities in the past year, you know that they have not been the best performing commodities.

The other big reason of course is that investing in commodities used to be very complex and expensive but with the explosion of ETF’s, buying exposure in almost any commodity is fairly easy and adds more diversification into your portfolio. Also, since very few expect demand for these commodities to diminish anytime soon, it does look like an asset class that should be added to most portfolios.

Before getting started, let’s take a look at the top commodity ETF’s in 2010:

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As you can see, the race wasn’t really close as silver dominated

Futures or Physical based?

We discussed the subject very recently and while there is no easy answer that applies to all commodities, I think it’s important to consider this when selecting a commodity ETF.

Largest ETF’s?

One of the easy ways to look for good ETF’s is to take a look at the largest ETF’s. While following the crowd is not always the best way to do things, it can give you a good idea of ETF’s.. here are the commodity ETF’s that have over $1 billion in assets:

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Oil & Natural Gas

Both oil and natural gas have been very volatile in recent years making it very difficult for investors, I would personally stay away from oil at the moment but here are some options if you are interested:

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And some natural gas ones:

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Gold?

There is a lot of speculation about gold and where it is headed in 2011 and beyond. Some expect the price to double while others still have a lot of doubt. Here are some ETF’s:

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My Picks?

Personally, I prefer sticking to commodities that have the most “real” use and would go long Silver despite its incredible run in 2010. Also, going long Agriculture and broad commodity ETF’s. Here are some of those I will consider!

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What are your picks for 2011?

Disclosure: No positions on these commodity ETF’s

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1 Comment

  1. […] -Commodity ETF’s that hold physical commodities (such as GLD) -Futures based (focus on ETF’s that do not roll monthly but rather infrequently.. They will suffer less erosion) […]

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