Time is Up to Buy Good Balanced Commodities Basket

Inflation is skyrocketing, and now when Russian oil is banned by Europe and the U.S. and moving towards $200 or even $300/bbl mark, new reality is already knocking our doors. Equities, bonds, and most asset classes will likely keep plummeting. Commodities is about the only class currently offering investors a safe haven.

The Invesco DB Commodity Index Tracking ETF (DBC) is a simple commodity index ETF, and has performed quite well under current similar market conditions in the past. The fund offers investors diversified exposure to commodity prices, through futures contracts. DBC should see strong, market-beating returns when inflation is high, as has been the case YTD. DBC is appropriate for aggressive, short-term traders bullish on commodity prices.

Deutsche Bank Index Quant Group’s (DBIQ) is responsible for launching, daily calculation, rebalancing and retiring of proprietary Deutsche Bank benchmarks. As at Q2 2016, DBIQ maintains approximately 3500 benchmarks. These tradable prop securities represent the benchmark-linked products such as total return swaps, certificates and index linked funds.

DBC is a diversified commodities index ETF. The fund tracks the DBIQ Optimum Yield Diversified Commodity Index Excess Return. The DBLCI index aims to represent the performance of the commodity market, it invests in six commodities: Sweet Light Crude Oil (WTI), Heating Oil, Aluminium, Gold, Wheat and Corn. The weights are fixed and have been designed to be broadly representative of the commodity markets.

DBC is nearly the only liquid ETF which provides investors broad balanced commodities exposure, while other funds and investments are usually limited to offering exposure to a specific commodity. Diversification reduces portfolio risk and volatility, while preserving significant benefits for the fund and its shareholders. Considering the above, DBC's investment thesis is quite simple. DBC outperforms when commodity prices are increasing, making the fund an appropriate investment for commodity bulls.