Commodity ETFs: It Takes Two To Contango

Futures-based investing has long been a popular option for those looking to gain exposure to commodities that were otherwise difficult to reach. But with the introduction of ETFs came increased granularity in this investing segment, as there are now exchange traded products that offer exposure to a wide variety of commodities through a single ticker. This alleviates the stress and complexities that are involved with managing a futures account, while allowing investors to sometimes gain access to multiple commodity futures with just one fund. Still, for everything that ETFs have opened up for the everyday investor, these funds are by no means perfect. The biggest issue with numerous futures-based funds is contango. When futures markets are contangoed–near month futures are cheaper than those expiring further into the future–the roll process can mean selling low and buying high, thereby creating some significant headwinds for investors. Exchange traded commodity products are powerful [...] Click here to read the original article on ETFdb.com. Related Posts: Everything You Need to Know About PPLT, The New Platinum ETF How Contango Impacts ETFs UBS Unveils Natural Gas, Oil “Contango ETNs” Commodity ETF Investing: Five Factors To Consider Strange Times For The Natural Gas ETN (GAZ)