IInvestor choices in the world of exchange-traded funds (ETFs) were heavily influenced by inflation for much of the year. Capital inflows into Invesco commodity ETFs are proof of this.
With consumer prices rising again in February, inflation remains a major concern for investors, and one of the ways to hedge against it is with commodities. As such, the Invesco ETF with the highest inflows so far in 2022 is the Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF (PDBC).
Using an active management strategy, PDBC aims for long-term capital appreciation. The fund seeks to achieve its investment objective by investing in a combination of financial instruments economically linked to the world’s most traded commodities.
Commodities are assets that have tangible properties, such as oil, agricultural products, precious metals or crude metals. They offer investors alternative assets that are relatively uncorrelated to major stock indices.
Additionally, PDBC offers exposure to commodity futures without the tax hassle of a K-1. The fund also tries to avoid “negative rollover returns,” which could erode returns over time.
Cover rising energy costs
Coming in third after Invesco’s equally-weighted Strategic ETF, it’s a broader energy play with the Invesco DB Commodity Index Tracking Fund (DBC). DBC seeks to track changes, whether positive or negative, in the level of the DBIQ Diversified Agriculture Index Excess Return™ (DBIQ Diversified Agriculture Index ER or Index), as well as interest income from the fund’s holdings , primarily US Treasury securities and money market income. less fund expenses.
DBC offers investors profitable exposure to commodities in the convenience of an ETF wrapper. The index tracked by the fund is a rules-based index comprised of futures contracts on 14 of the world’s most traded and largest physical commodities.
As of March 11, the fund consisted primarily of diesel fuel, Brent crude, gasoline and WTI crude. Combined, the exposure represents 50% of the fund, giving investors broad exposure to energy.
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