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How contango can affect your commodity ETF

Posted on 04 March 2013

Exchange traded funds have helped retail investors easily access various commodities assets. However, investors should know the risks associated with commodities investments that use futures contracts, which could lead to underperformance and even losses if you are not careful.
Specifically, commodity ETFs and other funds that invest in futures contracts are susceptible to contango in the futures market. Contango occurs when the price on a futures contract is higher than the expected future spot price, which creates the upward sloping curve on future commodity prices over time, writes Aaron Levitt for Investopedia………………………………………..Full Article: Source


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VRS - who has written 37214 posts on Opalesque Commodities Briefing.


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