Portfolio Protection

2 GreenHaven Continuous Commodity Index Fund (GCC) Commodity markets are another intriguing possibility. While demand for food and energy is steadily rising in both developed and developing economies, supply is stalling. That’s pushing commodity prices upward. Single commodity ETFs—those that track just agricultural goods, natural resources, precious metals, or industrial metals—have recently experienced a major swing in performance; diversified commodity ETFs, however, have been less volatile. Investing in a broad basket of agriculture, gas, precious metals, and other natural resources is also a great way to hedge against inflation. GreenHaven Continuous Commodity Index Fund tracks an index of 17 commodity products in five sectors with 24% of holdings in metals, 18% energy, 18% grains, 12% livestock, and 29% soft commodities (cotton, sugar, etc.).

This ETF focuses on futures contracts, which can rise faster in value than inflation and in turn can help investors protect portfolios against higher prices. The fund spreads its money evenly among all 17 commodities and rebalances daily, a move that limits its volatility. The one-year average for the GreenHaven ETF is 40.47% while the expense ratio is 0.85%.
PRICE AT REC.: $34.66  •  P/E: N/A

3 Vanguard Small-Cap ETF (VB) Small company stocks offer investors high growth but with volatility. An ETF that provides diversified exposure to the group is the Vanguard Small-Cap ETF. Its expense ratio is very low—0.12%—and the ETF seeks to track the performance of the MSCI US Small Cap 1750 Index. The ETF’s portfolio, with more than 1,700 holdings, is spread among a variety of industries—financials and information technology are its biggest weightings—providing diversification that protects investors from a downturn in any one segment of the economy. The Vanguard ETF has reported an average annual return of 7.46% over the last three years.
PRICE AT REC.: $71.56  •  P/E: 18

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