What You Need To Know About Commodity Indexes

For many investors, index investing continues to draw support in most portfolios. The proponents of the passive style of investing continue to grow as the poor returns of the “lost decade” have shown that active investment management, for the most part, fails to the beat the market–especially once trading costs, fund fees and taxes are taken into account. As index investing is relatively passive, index funds usually have lower management fees and expenses than actively-managed funds. As such, the number of stock and bond index funds and ETFs continues to grow, and that growth is also spreading into the commodity space [for more commodity news and analysis subscribe to our free newsletter].

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Is Commodity Investing Dying? Part 1

Commodity futures markets were originally designed for producers to hedge their risks against unforeseen complications. But as the years went on, more and more retail investors began piling into this asset class, as they enjoyed the diversification benefits offered by hard assets. Now, many long-term buy and hold investors allocate anywhere from 5-20% of their assets to commodity holdings, but that trend may be hitting a roadblock [for more commodity news and analysis subscribe to our free newsletter].

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How Much Money Your Favorite Commodity ETFs Make

ETF investing turned the commodity world from a difficult-to-reach asset class to exposure that any retail investor could quickly add to their portfolio. The years have seen a number of innovative products come and go, but through thick and thin a select group of funds have broken away from the rest, as they have maintained their popularity. And just like any other business, these funds need to make money to stay open (and to hopefully make you money), as they have plenty of operating costs to take care of [for more commodity ETF analysis subscribe to our free newsletter].

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GSG In Depth: The Five Minute Guide To The GSCI Commodity Fund

Many investors have embraced the exchange-traded product structure as the preferred vehicle for accessing broad based commodity exposure. Investors have a whole host of options available to them, with some funds focusing in on specific commodity families, while other offerings employ unique methodologies to help fight the impacts of contango. One of the oldest ETPs offering broad exposure to the commodity market is the iShares GSCI Commodity-Indexed Trust Fund (GSG), which has amassed close to $1.3 billion in assets under management since its launch in the latter half of 2006 [for more commodity ETF news and analysis subscribe to our free newsletter].

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5 Worst-Performing Commodities In 2012

There are three primary determinants of commodity prices: supply, demand and sentiment. In the near term, if supply exceeds consumption, commodity prices tend to fall. Sentiment, or the opinion of traders that either look to hedge commodity prices to try and smooth out production costs or speculate for profit, is another important indicator that is much more difficult to gauge. For the most part, excess supply conditions are driving prices of the below commodities lower. They happen to be the worst performers so far this year, which could be due in good part to negative sentiment because in a number of cases the price is well below what the fundamentals appear to support [for more commodity news and analysis subscribe to our free newsletter].

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Commodity ETF Spotlight: GSG In Focus

Many investors have embraced the exchange-traded product structure as the preferred vehicle for accessing broad based commodity exposure. Investors have a whole host of options available to them, with some funds focusing in on specific commodity families, while other offerings employ unique methodologies to help fight the impacts of contango. One of the oldest ETPs offering broad exposure to the commodity market is the iShares GSCI Commodity-Indexed Trust Fund (GSG), which has amassed close to $1.5 billion in assets under management since its launch in the latter half of 2006 [also see Three Legendary Commodity Investors]. GSG is similar to other broad commodity ETPs in many ways, however, its product structure results in a unique risk/return profile that may attract some investors while potentially turning away other.

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Commodity ETFs: Five Factors To Consider

This article originally appeared on ETFdb.com. Commodity ETPs can be extremely powerful tools for tapping into an asset class capable of providing both return enhancement and diversification benefits. With dozens of products available–there are more than 120 U.S.-listed commodity ETFs according to the ETF screener–picking the right fund for your investment objectives and risk tolerances can be challenging. Beyond the type of commodity included, there can be several attributes of commodity ETPs that shape the risk/return profile; below, we look at five factors to consider when trying to narrow down the universe and find the right commodity ETF (or ETN):

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