Consider Using an Energy-Focused Commodities Fund

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker, financial journalist, and money manager.

The iShares S&P GSCI Commodity-Indexed Trust (GSG) provides investors with exposure to a broad range of commodities. The fund does this by following the S&P GSCI index, which is composed of a diversified group of commodity futures.

One unique feature about GSG is that it is not a standard exchange-traded fund (ETF), but rather a commodity pool. A commodity pool uses investor contributions as leverage in the commodities trading markets. Also, commodity pools are regulated by the Commodity Futures Trading Commission and not the Securities and Exchange Commission (SEC).

GSG does not hold contracts in the underlying commodities (energy, industrial and precious metals, agricultural and livestock) like many other funds, but instead holds only long-dated futures contracts on the GSCI itself, as well as substantial cash and treasury bills as warranted. Investors can use GSG as an easy way to diversify their portfolios, since the fund’s huge total assets of $1.45 billion and daily trading volume of 1.2 million give it great liquidity.

In terms of offering exposure to various commodities, GSG more or less covers the normal broad spectrum. However, the fund does place a heavier emphasis on energy commodities. WTI crude, crude oil, natural gas and other energy commodities make up 61% of the index’s exposure. Agriculture commodities account for 16%, while industrials metals compose 11%, livestock take 7% and precious metals comprise 4%.

GSG is something of a turnaround play. The fund, launched in July 2006, originally traded above $30 a share before falling by more than half in 2014 and 2015. The fund’s one-year return is 4.48%, and it currently is almost 25% above its low of $13.17 on June 22, 2017. GSG carries a rather high expense ratio of 0.75% and does not pay a dividend.

Exclusive  Gain Exposure to Dividend-Paying Companies with This Fund

For investors who are seeking a convenient way to make a play on the overall commodities market, I encourage you to consider the iShares S&P GSCI Commodity-Indexed Trust (GSG).

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.

share on:

Like This Article?
Now Get Jim's FREE Special Report:
The Top 11 Dividend ETFs to
Buy Right Now

Get up to 5X the yields of traditional income plays.

Get Access to the Report, 100% FREE

share on:


Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

Product Details

  • Forecasts & Strategies
  • Home Run Trader
  • Fast Money Alert
  • Five Star Trader
  • TNT Trader

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays.

Product Details

  • Cash Machine
  • Premium Income PRO (exclusively for subscribers of Cash Machine)
  • Quick Income Trader
  • Breakout Options Alert
  • Hi-Tech Trader

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker,
financial journalist, and money manager. As well as a book author and regular contributor to
numerous investment websites, Jim is the editor of:

Product Details

  • Successful Investing
  • High Velocity Options
  • Intelligence Report
  • Bullseye Stock Trader
  • Eagle Eye Opener

Bob Carlson

Bob Carlson provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

  • Retirement Watch
  • Retirement Watch Spotlight Series
  • Lifetime Retirement Protection Program

Jon Johnson

Jon Johnson's philosophy in investing and trading is to take what the market gives you regardless if that is to the upside or downside. For the past 21 years, Jon has helped thousands of clients gain success in the financial markets through his newsletters and education services:

Product Details

  • Investment House Daily
  • Stock of the Week
  • Technical Traders Alert
  • Rapid Profits Stock Trader

Used by financial advisors and individual investors all over the world, is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

  • Dividend Investor