Wiandt on CNBC: Hot Commodity ETFs

January 06, 2011

What’s not to like about commodity ETFs with tickers like “MOO,” “CORN” and “PBJ”?

A growing number of commodity ETFs, some based on futures and others based on equities, are now available to investors as the bull market in food and industrial materials enters its second decade, IndexUniverse.com Publisher Jim Wiandt said today on CNBC.

“There’s a whole spate of new ETFs that have entered the market recently,” Wiandt told a panel. “You have one big choice to make: Do you want to play the futures or do you want to play the stocks?” Wiandt said, noting that many of the products have catchy tickers.

The worldwide commodity boom is largely related to the rapid growth of countries like China India and Brazil. The rise in prices is also related to the falling dollar, as many commodities such as crude oil are priced in dollars. Also, some analysts worry that real shortages in food and some industrial materials are quite possible, which would mean prices could go much higher than they are now.

Wiandt said he favors broad futures-based exposure, like the Powershares DB Agriculture ETF (NYSEArca: DBA) provides. But he said plenty of exchange-traded products are on the market for investors who prefer single-commodity exposure or would rather hold equity funds that own commodity-related companies.

A Menu Of Options

“There’s definitely a temptation to play the individual commodities, and there are very easy tickers to remember there,” Wiandt said. “’CORN’ has been blowing the doors off, he said referring to the Teucrium Corn ETF (NYSEArca: CORN).

“And if you want to play the sugar market, which is up about 100 percent in the last six months, sugar is SGG." That’s an exchange-traded note, the iPath Dow Jones-UBS Sugar Sub Total Return ETN (NYSEArca: SGG). Unlike ETFs, ETNs don’t actually hold any assets but, rather, are credit instruments that promise their holders the returns of an underlying index, minus expenses.

Wiandt also said Van Eck Global’s Market Vectors Agribusiness ETF (NYSEArca: MOO) is a solid ETF of companies that sell things like fertilizer and equipment to farmers -- and has a memorable ticker as well.

“On the food production side, you’ve got PBJ – very clever as well,” Wiandt said, referring to the PowerShares Dynamic Food & Beverage Portfolio (NYSEArca: PBJ).


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