Not All Commodity ETFs Are Created Equal
August 19, 2010 at 17:10 PM EDT
There are many ways to classify commodity ETFs. One alternative is by the type of commodity they track, such as gold or oil. Another is by the type of investment product they use. There are three common types of commodity ETFs by the type of investment: physical commodities, futures-based, and equity-based. Understanding the nuances of these different investments is important when considering commodity ETFs. Physically backed commodity ETFs invest directly in the physical commodity, and issue shares backed by the physical inventory. The largest physically backed ETF is the SPDR Gold Shares (NYSE:GLD) with $50 billion in assets. This is more gold than the official gold reserves of Switzerland or China. Important considerations for physically backed ETFs…