Investors Are Flocking To This Commodities ETF

The PowerShares DB Commodity Index Tracking Fund DBC gained almost 5 percent last year, a decent though not awe-inspiring performance among commodities exchange traded products.

DBC finished 2017 on a strong note and the fund is extending its bullish ways to start 2018. Investors are taking notice.

“Invesco’s PowerShares DB Commodity Index Tracking Fund climbed for an 11th straight session through Wednesday, the longest winning streak since it was listed in 2006,” reports Bloomberg. “The fund attracted $10 million in each of the first two trading days of the year, taking total assets in the largest ETF tracking a broad basket of commodities to $2.29 billion.” 

More Than That

As of Jan. 3, DBC's 2018 inflows were close to $70 million, good for the best total among all PowerShares exchange traded funds, according to issuer data. 

DBC, which tracks the DBIQ Optimum Yield Diversified Commodity Index Excess Return, provides investors with basket exposure to commodities, rather than focusing on a single commodity.

DBC “is designed for investors who want a cost-effective and convenient way to invest in commodity futures,” according to PowerShares. “The index is a rules-based index composed of futures contracts on 14 of the most heavily traded and important physical commodities in the world. The fund and the index are rebalanced and reconstituted annually in November.” 

DBC Drivers

DBC is nudging higher to start 2018 and flirting with a 52-week high thanks in part to resurgent oil prices. Amid geopolitical tensions in Iran, a member of the Organization of Petroleum Exporting Countries, oil prices are surging to start 2018. That helps DBC, which allocates about a quarter of its combined weight to West Texas Intermediate and Brent crude contracts.

Gold and natural gas combine for over 13 percent of DBC's weight. The ETF also features exposure to four agricultural and soft commodities as well as three industrial metals.

“Goldman Sachs Group Inc. analysts said in December the outlook for commodities is brighter over the next year, predicting the sector will post a 7.5-percent return,” according to Bloomberg.

Over the past decade, DBC has outperformed the widely followed S&P GSCI Commodity Index.

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