I am retired and take educated guesses on all things financial.

August 08, 2007

August 9, 2007: Attaboy! and a better ETF for commodities

Once in a blue moon, everything goes better than planned. Wednesday was my second best overall performance of portfolios to date this year. When a bit of a laggard, VHI, goes up 28%, you are indeed lucky, not brilliant. I am not going into details, because this portfolio will not hit another inside the park home run for awhile, if ever. As usual, I'll release my portfolio in portions over the next few months.My portfolios are not biased in one or two sectors, they are balanced to suit me. Thus, a killer day is a welcome event.


Goldman Sachs has launched a new ETF, the GS Connect S&P GSCI Enhanced Commodity Total Return Strategy Index ETN (GBC). This fund may also win first place in length of name.

The security tracks the S&P. This ETN also takes into account several new indexes that try to avoid contango. Contango happens when the cost of the next month future's contract is more expensive than the current month contract. This has investors loosing an edge.

Here iare the marked enhancements for this commodity fund:

In oil markets, the WTI crude, if contangoed more than .50%, dictates that the fund will roll the index from the first month to the sixth month, rather than the first to the second. And, for Brent crude, if the contango between the second and third month is more the .50%, the index rolls from the second to the seventh month.

The index also factors other commodities in a unique paring:

The Heating Oil contract is rolled only to the December contract (annually).
The Natural Gas contract is rolled only to the January contract (annually).
The Chicago Wheat contract is rolled only to the September or December contract biannually.
The Corn contract is rolled only to the July contract (annually in May).
The Lean Hogs contract is rolled only to the April or August contract biannually.
The Live Cattle contract is rolled over only to the April or October contract biannually.

More twists and turns are included...go see for yourself.

Is this worth a 1.25% annual fee plus the usual expenses? Maybe.

It is worth looking at if commodities are in your investment world.

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