Commodity ETFs

In November of 2004, a new type of exchange-traded fund (ETF) was launched. It was called StreetTracks Gold Shares (GLD) and it was the first of its kind: an ETF that tracked a commodity. According to Morningstar, within weeks after launch, it amassed $1.5 billion in assets – an impressive launch for any type of investment product.

As with most great successes, other companies are jumping in. Here is a look at other commodity ETFs coming to an exchange near you:

Silver ETF
Barclays Global Investors already launched a gold ETF (IAU) in February, 2005. They plan to follow it up with a silver ETF. It will be called the iShares Silver Trust.

Currency ETF
Rydex Investments, a creative inventor of alternative mutual funds, plans to launch the first currency ETF. They are focusing in on the European Union by launching what will be called the Rydex Euro Currency Trust.

Oil ETF
Ameristock Funds plans to launch the Ameristock Funds New York Oil ETF and Macro Securities Depositor LLC plans to launch not one, but two oil ETFs. Deutsche Bank is launching a slightly more diversified ETF which features half oil and half metals and crops. It will be called the Deutsche Bank Liquid Commodity Index.

As with all ETFs, I caution you to learn about the risks involved. Don’t treat these as typical ETFs, because these track very different types of investments – ones that have different market cycles and histories.