Q: I am considering adding an ETF that provides coverage of assorted/balanced commodities. I would appreciate having some names that you would recommend; Canadian or USA. What is your opinion of adding a position as an uncorrelated asset to balance an all equity portfolio. I hold diversified energy holdings already (pipelines and producing companies in both oil and gas). I also hold mining stocks, RIO and AEM.
5i Research Answer:
DBC is on of our favourites, as it tracks 14 different commodities. Its five-year annualized return is 17.7% and it offers a 5.01% yield currently. Fees are 0.87%, assets $1.3B. FTGC is similar, with a lower yield and marginally higher long term return. There are few attractive choices in Canada. COW is an agricultural ETF that has a very good performance history (19.7% five years) but is not as diversified as the others noted. We are fine with adding such exposure. DBC, for example, has a Beta of 0.31 and is certainly not correlated to equities.