Why aren't there more commodity ETFs?

Discussion in 'ETFs' started by DrPepper, Nov 17, 2009.

  1. it's because 40-Act funds can't outright own commodities therefore they need SPVs and other structures to properly get exposure. This is very expensive and complicated therefore you need the market (demand) to justify the product.
     
    #11     Nov 18, 2009
  2. What does that mean? :confused:
     
    #12     Nov 18, 2009
  3. how about $8.49 for 87-octane, while you're at it?


    these funds receive monies that need to purchase assets, commodities, futures and such artificially creating false demands which inflate prices, destroy economies of scale as well as, in this case heavily contribute to the destabilization of the USD....

    why don't we fully regulate these ETF's that purchase essential commodities so that they don't contribute deliteriously?
     
    #13     Nov 18, 2009
  4. keep in mind, that commodities have a continuous "leaking balloon" syndrome. In other words, if the underlying does not move and the market is not in backwardization, then the commodity loses value over time, due to builtin charges such as storage.

    If you are short, that works in your favor, if long, it works against you. This is a concern if you are holding for long periods.
     
    #14     Nov 19, 2009
  5. Just to clarify you're speaking of futures, for a commodity tracking ETF, like gold, this is not an issue, provided the ETF doesn't gain any of its exposure through futures (some do). GLD I believe holds physical gold to gain its exposure.
     
    #15     Nov 20, 2009
  6. Jim Rogers would say: 'because we are still early in the commodity bull cycle.':)
     
    #16     Nov 20, 2009
  7. MTE

    MTE

    Do you have any data to back up the claim that the commodity market dwarfs the stock market in size?

    If I'm not mistaken its the other way around, at least when it comes to the exchange-traded commodities (the OTC market may be bigger).
     
    #17     Nov 20, 2009