PowerShares DB Commodity Short ETN (DDP)

The Current Rating for “DDP” is: -3.49%

To find out what this score means, go here

What you need to know

DDP is an ETN which means that the short exposure to the targeted commodity futures is achieved through a swap arrangement with the sponsor, Deutsche Bank. Unlike ETFs where shareholders have a strong claim to the assets held by the fund, ETN holders hold the equivalent of a senior, unsecured, unsubordinated loan on the counter-party.

What’s inside?

The ETN holds a swap that promises to deliver the economic value of short futures positions in Wheat, Corn, Light Sweet Crude, Heating Oil, Gold and Aluminum. The ETN is part of a range of ETNs that offer long exposure (DPU), double long exposure (DYY) and double short exposure (DEE) in addition to the short exposure offered by DDP.

When should you buy DDP?

Since this is a broad based fund that is shorting foodstuffs, energy, precious and base metals, the only time this ETN would be a good bet is after a significant general rise in commodity prices has stalled and looks ready to reverse. Deutche Bank is a strong counterparty and if that situation were to change, it would be well broadcast. In the literature, Deutche Bank claims that its strategy and structure reduce the cost of contango and take advantage of backwardation. But first, investors should first decide if any commodity futures related investments are appropriate for their portfolio. Second, since the return profile for commodity futures investments (both long and short) are significantly different from other more traditional asset classes, investors should shorten their time horizon and check performance a bit more often than with other investment products.

Invesco PowerShares Commodity ETN Information Page
Yahoo Finance
Google Finance