​iShares Commodities Select: A Diversified Strategy

MoneyShow |

We diversified our Income Growth model portfolio last month by adding commodities through iShares Commodities Select Strategy, an exchange-traded fund (ETF), notes fund expert Bob Carlson, editor of Retirement Watch.

The commodities bear market appears to have formed its bottom. Demand for commodities is likely to increase because of continued global growth.

It will take producers time to reverse the investment and production cutbacks instituted during the bear market. Commodity prices should benefit from the trends for a while. Commodities also are a good hedge against inflation.

COMT can invest in any of the 24 commodities in the S&P GSCI and manages those investments using the proprietary quantitative models of its manager, BlackRock. The models try to capture intermediate and long-term factors.



The fund can invest in stocks of commodity producers as well as commodities futures and options. Its holdings recently were invested about 30% in stocks and 70% in futures and options. COMT issues 1099 forms at tax time, not K-1s. It also makes periodic distributions.

The top sectors of the stock portion of the fund recently were 16% in agriculture, 6% in base metals, 4% in timber, 3% in precious metals and 2% in energy.

The futures were invested 42% in energy, 15% in agriculture, 6.5% in base metals, 4.6% in livestock and 1% in precious metals. Energy is likely always to be the largest position and more than 25% of the fund.

Bob Carlson is editor of Retirement Watch.

Subscribe to Bob Carlson’s Retirement Watch here…

About MoneyShow.com: Founded in 1981, MoneyShow is a privately held financial media company headquartered in Sarasota, Florida. As a global network of investing and trading education, MoneyShow presents an extensive agenda of live and online events that attract over 75,000 investors, traders and financial advisors around the world.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Comments

Emerging Growth

WRIT Media Group Inc

WRIT Media Group Inc produces films, television programs and similar entertainment programs for various media formats.

Private Markets

iPRO Network, LLC

We provide the platform, tools, and resources to empower individuals and professionals to market desirable goods and services to the public, taking the place of traditional methods of commerce.

The Green Organic Dutchman

The Green Organic Dutchman Ltd. ("TGOD") produces farm grown, organic cannabis for medical use. The company grows its high quality organic cannabis in small batches using craft growing, all natural…