Daily ETF Watch: PowerShares Takes On DBC

December 31, 2013

The huge commodities fund ‘DBC’ looks like it will get competition from a surprising source.

PowerShares filed paperwork for an actively managed commodity fund that will give investors exposure to a diversified set of commodities via futures contracts and derivatives. It looks like the proposed fund will compete with “DBC,” a $5.7 billion indexed and futures-focused commodities ETF PowerShares markets for Deutsche Bank.

The filing comes at a time when the Federal Reserve is cutting back on its stimulus program and gold prices have plummeted. DBC, the PowerShares DB Commodity Tracking Fund (B-74), has meanwhile slid by 7.5 percent amid softening demand for commodities.

Gold prices have fallen 29 percent this year in part on expectations of the Fed’s tapering of its bond0buying program. It’s been a tough year for the bullion ETF, SPDR Gold Trust (GLD | A-100), which has lost more than $25 billion in assets, making it the least popular ETF of 2013. Including price declines, its assets are down 60 percent to $31 billion.

The PowerShares Diversified Commodity Strategy Portfolio will have exposure to 14 heavily traded commodities in the energy, precious metals, industrial metals and agriculture sectors via a combination of commodity-linked futures contracts and swaps.

The fund also seeks to gain exposure to the commodities markets through investments in a subsidiary organized in the Cayman Islands not to exceed 25 percent of the fund’s total assets.

BulletShares Mature

 

Two target-date corporate bond funds sponsored by Guggenheim are maturing and closing today, as described in the fund prospectuses. Guggenheim’s lineups of BulletShares fund—one targeting investment-grade corporate credits, the other high-yield debt issued by companies, expire and close at a given date.

The two maturing funds and their assets are as follows:

  • Guggenheim BulletShares 2013 Corporate Bond ETF (BSCD | B-41), $183.8 million
  • Guggenheim BulletShares 2013 High Yield Corporate Bond ETF (BSJD | C-32), $201.9 million

Similar to when individual bonds mature, investors in BulletShares ETFs collect the equivalent of par, minus expenses, at the time of maturity. They can, if they choose, reinvest the proceeds into another BulletShares, in a ladderinglike strategy.

The official maturation date of the two funds is Dec. 31, 2013.

It’s the third investment-grade BulletShares to mature and the second high-yield one to expire, providing further proof-of-concept to the BulletShares product line.

There were no other filings or launches this morning.

 

 

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