Pass on this ETF: iShares GSCI Commodity Dynamic Roll Strategy ETF

Article Excerpt

ISHARES GSCI COMMODITY DYNAMIC ROLL STRATEGY ETF $26.17 (New York symbol COMT) invests in a broad range of commodities. At the end of March 2023, the fund’s asset were effectively distributed to energy (57%), agriculture (19%), industrial metals (12%), and livestock (8%). The fund started up in October 2014, and its MER is 0.48%. The ETF makes use of futures contracts to get exposure to the underlying commodities. It also holds a large portion of its assets in low-risk, fixed-income instruments as collateral for its investments in the futures contracts. In 2022, the fund performed very well. Not only did commodity prices generally move upwards, but the ETF earned more interest from its fixed-income investments. This resulted in a large annual distribution of $8.40 a unit in 2022—for a yield of 32.2%. But investors should be aware that the 2022 distribution was 50% higher that the highest previous annual distribution and more than double the second-highest distribution. As such, it’s unlikely to be repeated. As well, we feel…