Deutsche Bank Mixes Up Commodity ETFs

By Staff Writer

December 01, 2009 at 02:00 AM

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The Commodity Future Trading Commission has been waging war against commodity index funds and visible evidence they are winning that war has already begun to manifest itself.

In response to the CFTC's contention that commodity index funds are distorting the price of commodity futures, Deutsche Bank has expanded the number of commodities tracked by two of its commodity ETFs.

The changes impact the PowerShares DB Commodity Index Tracking Fund (DBC) and the PowerShares DB Agriculture Fund (DBA). Both funds now contain additional commodities among their respective holdings to comply with position limits mandated by the CFTC.

In addition to the six commodities it already tracked (aluminum, corn, gold, heating oil, sweet crude oil and wheat), DBC added Brent crude, copper grade A, natural gas, RBOB gasoline, silver, soybeans, sugar and zinc.

DBA, in addition to the four commodities it already tracked (corn, soybeans, wheat and sugar), added cocoa, coffee, cotton, feeder cattle, Kansas wheat, lean hogs and live cattle.

Other embattled commodity ETFs and ETNs have made dramatic changes.

In September, Deutsche Bank redeemed all outstanding shares in the PowerShares DB Crude Oil Double Long Exchange Traded Note (DXO), and Barclays Global Investors suspended share issuance for its $1.6 billion iShares S&P GSCI Commodity-Indexed Trust (GSG.)

Other single-commodity ETFs with large positions in commodity futures have curtailed share issuance or are in the process of evaluating commodity exposure alternatives.

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