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Keep an Eye on Commodities in 2014

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Commodities have had a volatile go of it in 2013. Yet the recent rebound in the global economy that, in part, led to the Fed’s decision to taper, means that commodities could be on the road to recovery in 2014. A commodities fund to keep an eye on for this possible future ascent is the iShares S&P GSCI Commodity-Indexed Trust (GSG).

As its name indicates, this fund is tied to the S&P GSCI Total Return Index; GSG seeks investment results which generally correspond, before fees and expenses, to the performance of that index. The index itself holds long positions in commodities futures contracts.

As previously mentioned, commodities have not done well this year. In a volatile 2013, as shown by the chart below, GSG has fallen 1.22%. However, this fund recently has experienced a slight rise from a November trough, indicating that it does have potential for future growth.


Since this ETF follows the results of an index, it does not allocate any of its assets to specific sectors or market-traded stocks. Instead, the fund relies on futures contracts to generate its returns.

If the economy improves, and as the Fed continues to taper in 2014, commodities may rebound. If they do, a way to capitalize on their rise could be the iShares S&P GSCI Commodity-Indexed Trust (GSG).

If you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my Successful Investing newsletter. As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an e-mail. You may see your question answered in a future ETF Talk.

In case you missed it, read my e-letter from last week about bearish Japan fund JPNS. I also invite you to comment about my column in the space provided below.

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About Doug Fabian

Doug Fabian is the editor of the monthly investment newsletter Successful ETF Investing, and is the host of the syndicated radio show "Doug Fabian's Wealth Strategies." He also recently began writing the weekly trading service ETF Trader’s Edge. Taking over the reins from his dad, Dick Fabian, back in 1992, Doug has continued to uphold the reputation of the newsletter as the #1 risk-adjusted market timer as ranked by Hulbert’s Investment Digest. Doug published the book "Maverick Investing," and has appeared as a commentator on CNBC, Fox News, and CNN. He also has been quoted in the Wall Street Journal, USA Today, Barron's, and other publications. For more information about Doug’s services, go to http://www.fabian.com/

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