POWERSHARES DB AGRICULTURE F (DBA)
The Current Rating for “DBA” is: -9.71%
To find out what this score means, go here
What you need to know
DBA is a rules based foodstuff commodity fund that seeks to closely replicate the Deutsche Bank Liquid Commodity Index Diversified Agriculture Excess Return Index. Because it is investing in futures, the issue of contango is something that needs to be considered.
What’s inside?
The fund invests in liquid agricultural futures contracts. The base weightings are: Corn, Live Cattle, Soybeans, Sugar and Wheat which account for 12.5% (1/8th) each; Coffee and Cocoa which account for 11.1% each; Lean Hogs (8.3%), Feeder Cattle (4.2%) and Cotton (2.8%) round out the list of contract exposure. Actual position exposures will vary with price changes according to the rules laid out in the prospectus.
When should you buy DBA?
Before you ask “when”, the first question is actually “if”. DBA uses a fund structure but the underlying exposure is still to the agricultural futures markets. If you do not understand the concepts of backwardation, contango and other key commodity investing concepts, you should consider a vehicle that invests in companies involved in the agricultural sector to start. As for the “when”, since the fund is diversified across different types of foodstuff commodities, one would require a general upsurge in prices to make money with this ETF. Since foodstuffs are highly price elastic, this ETF is more of an opportunistic investment vehicle rather than a long term holding. That said, if used in a rules based investment system, its non-correlation with other financial assets would make it appropriate for inclusion in an investment universe screening process.
Invesco PowerShares Information Page
Yahoo Finance
Google Finance
Leave a Reply
You must be logged in to post a comment.