Deutsche Bank Expands Holdings of Two Commodity ETFs

Here's an update to DBA, an agriculture ETF I recommend (and own).

Deutsche Bank to Expand Holdings of Two Commodity-Linked Exchange Traded Funds (Business Wire) 4:00 PM ET 09/30/2009

Deutsche Bank today announced it will increase the number of commodities tracked by the PowerShares DB Commodity Index Tracking Fund (DBC) and the PowerShares DB Agriculture Fund (DBA). The additional commodities will diversify the funds’ exposures, reduce the funds’ holdings in Chicago Corn and Wheat, and satisfy position limits imposed by the Commodity Futures Trading Commission in those two commodities.

PowerShares DB Commodity Index Fund (DBC)
In addition to the six commodities it currently tracks, DBC will add Brent Crude, Copper Grade A, Natural Gas, RBOB Gasoline, Silver, Soybeans, Sugar, and Zinc.

PowerShares DB Agriculture Fund (DBA)
In addition to the four commodities it currently tracks, DBA will add Cocoa, Coffee, Cotton, Feeder Cattle, Kansas Wheat, Lean Hogs, and Live Cattle.

My favorite agriculture fund is no longer an agriculture fund - damned feds. I still think it may have a place in my portfolio. You can read the press release here.

The Best ETFs

The 10 Best ETFs by Don Dion of TheStreet.com
You see a lot of these "best" lists on the internet. This one caught my eye because I happen to own several of these funds and I agree with the over-all analysis and diversity of Mr. Dion's picks, although I do use (not always better) alternatives in some investment sectors.

Here are the ETFs I own from Don's list:
LQD - iShares Investment Grade Corporate Bond: A good way to invest in medium-duration, investment-grade corporate bonds.

TIP - iShares Barclays TIPS Bond: A low-cost approach to investing in Treasury Inflation-Protected Securities.

GLD - SPDR Gold Shares: A practical and easy way to own a stake in physical gold.

SPY - SPDR S&P 500: The best broad stock market-tracking fund available.

Comments on the rest of Don's list:
VWO - Vanguard Emerging Markets Stock ETF: I've used EEM in the past, but as Don says, "This fund tracks the same index as the iShares MSCI Emerging Markets Index (EEM), but does so at a lower price." I can't disagree with that. In the unlikely event that I do decided to invest in emerging markets in the future I'll probably use VWO.

KOL - Market Vectors Coal ETF: I like coal, I've been invested in Alpha Natural Resources (ANR) for some time, but I think a broader natural resource fund, like IGE or IYE, is more appropriate for a conservative investor. You can read Don's article on natural resource ETFs here.

KRE - SPDR KBW Regional Banking ETF: Another good choice, smaller regional banks have done much better than their big brothers. I still like the dividends and added security of investing in preferred stocks via PFF for conservative financial sector investing.

PBW - PowerShares WilderHill Clean Energy: From the article, "Green energy has been a popular area for investors looking to capitalize on new trends in energy and conservation [...] government incentives could help to boost green-energy firms in the foreseeable future..." Two things, I'm not a believer and I don't trust the government.

IBB - iShares NASDAQ Biotechnology: Too risky for the conservative investor. I actually prefer Fidelity Select Healthcare (FSPHX). It's invested in enough biotech for me and this is one of those areas where I like to have professional money management.

EPI - WisdomTree India Earnings Fund: I believe that single sector country funds are too risky for conservative investors, and, every time I hear India, I think Pakistan, Kashmir, Afghanistan and nuclear weapons. It's just too creepy for me. If I do decided to venture into emerging markets like India I'll use EEM or the previously mentioned VMO.

In all fairness to Don, my differences lie in the fact that I am, at this point in my life, more conservative than he is. The ten ETFs he's picked are all very good choices for someone younger. Be sure and read his article, it's worthy of the title.

Read More: 10 Best ETFs (Part 1)
Read More: 10 Best ETFs (Part 2)
Related: Natural Resources ETFs
Related: 3 ETF Ideas for the Final Quarter of 2009

Taking Profits

The nice little stock market rally that started in March is beginning to look a little tired - that, combined with the looming and historically ugly months of September and October, has prompted me to take a little off the table. I have sold PFF (recommended here) for a handy profit and closed half of a rather disappointing long-term position in ANR. I've also tightened up a trailing stop-loss order on the aggressive SSO.

I still like PFF and I'll be adding it back to the portfolio at some point in the future, but a better than 40% profit in four months just begs to be tucked away.

I'm a little over invested in the energy sector and the prospects for coal (ANR) aren't looking good over the near to intermediate term. Coal (black energy) is the antithesis to the currently popular and politically correct green energy.

SSO isn't a typical investment for a conservative investor but I like to use a small portion of the portfolio for trading. I generally switch between SSO and SDS using a 5%-7% trailing stop-loss order. I base the trades on simple technical analysis. More often than not, this portion of the portfolio is in cash.

ANR - Alpha Natural Resources (coal)
PFF - iShares S&P U.S. Preferred Stock Index
SSO - Proshares Ultra S&P 500

Read More: Market Has Likely Topped
Read More: Global Coal Rally Nearing End