Morningstar Advisor - February/March 2013 - (Page 64)
Gray Matters
A Route to Commodities
that Bypasses the Futures Market
By Elizabeth Collins
Equities of producers offer the benefits of commodity investing
while avoiding derivatives and futures curves.
The love affair with commodities continues
unabated. Whether they’re looking for
diversification, an inflation hedge, or to
speculate on rising prices, investors
have plowed hundreds of billions of dollars into
commodity-related offerings, including
both mutual funds and exchange-traded funds
(Exhibit 1). Investments in commodity mutual
funds, for example, grew to more than
$137.6 billion by the end of 2011 from $9.2
64 Morningstar Advisor February/March 2013
billion at the end of 2002. The growth story
for commodity-tracking ETFs is even more
impressive. Assets skyrocketed to $150.4 billion
from $770 million over the same period.
Suffice it to say that we’ve come a long way
since legendary investor and commodity
aficionado Jim Rogers lamented, “Commodities
get no respect.” This statement would be far
from the truth today.
Ways to Invest in Commodities
There are three avenues to gain exposure to
commodities:
1. Physically Hold the Commodity
Physically backed exposure offers perfect
tracking (net a management fee) to the
underlying commodity, because the investor
owns the physical commodity. For most
investors, however, this is really only practical
Table of Contents for the Digital Edition of Morningstar Advisor - February/March 2013
Morningstar Advisor - February/March 2013
Contents
Contributors
Letter From the Editor
Social Media, the Old- Fashioned Way
Do You Use Active Strategies?
Youth Appeal
How to Buy the Unloved 2013
Morningstar Managers of the Year
Investments á la Carte
Investment Briefs
Approaches to Absolute-Return Investing
In Agriculture, It’s Good to Be Strong
Yes, There Are Good Active Funds
The Decoupling
Where It Could Pay to Be Active
The Active Fund That Defies Obsolescence
The Epitome of an Active Manager
Lines of Communication
The Existence of Market Timing ‘Intelligence’
A Route to Commodities that Bypasses the Futures Market
Best Positioned for Health-Care Reform
Diversified Stock Funds That Earn Their Stars
Our Favorite Mutual Funds
50 Most-Popular Equity ETFs
Undervalued Stocks With Wide Moats
A Twisted Debate
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