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ETF Specialist

Selecting Commodities-Futures-Based ETPs

When it comes to commodity-futures exchange-traded products, consider your investment time horizon.

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The past several years have seen the rise of proliferative interest in commodities as an asset class. Given the recent crash and the Fed's policy response, the cascade of long-only investment demand that poured into the space was born of several needs that commodities do a good job of satisfying.

Historically, commodities have shown to provide diversification away from the correlation of traditional asset classes. On that basis, commodities were looked to as an oasis of diversification following the downturn. As the Fed executed extremely loose monetary policy, hoping to prevent a deflationary spiral through the direct injection of capital to the economy, inflationary fears began to surface. The flames of demand were fanned, as commodities were looked to for their inflation-hedging benefits.

Abraham S.H. Bailin does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.