Problem(s): Owning actual commodities can be tricky to do, and even where it’s feasible, investors can find themselves forced into choosing some commodities instead of others at the exact worst time to do so.
This still doesn’t prevent temporary setbacks. Indeed, this ETF can at times tumble as much or more than stock-based indexes. It just usually does so at different times. But this basket of commodities also doesn’t tempt investors to try and cherry-pick what look like budding trends from individual commodities, which is just difficult to do very well for very long. It’s meant to be a buy-and-hold sort of position.
While most investors start and stick with stocks of conventional companies in their portfolio, equity isn’t your only option. You can — and should — own some physical assets, like gold, grains, or crude oil, as well. These commodities rise and fall just like companies’ stocks do but not in tandem with the broader market.
The PowerShares DB Commodity Index Tracking Fund (NYSEMKT: DBC) solves both problems. This exchange-traded fund is built to mirror the Deutsche Bank IQ Optimum Yield Diversified Commodity Index, which simply buys and holds stakes in the world’s 14 most important, commonly held commodities like the aforementioned gold, oil, and grains.