A Fall Commodities ETF Shopping List

Jim Lowell, editor of the Forbes ETF Advisor, thinks the market may have more room to run, and he’s particularly fond of commodities ETFs.

In a typical market cycle, given the spectacular rally that we’ve experienced since mid-March, harvesting some of those gains would normally make sense.

I don’t think this is a typical market environment, let alone a typical market cycle. Instead, I think we’re in a secular trough of the next global bull market cycle. In terms of prices, the next quarter could be a reverse picnic compared to the prior two. But if the improving macro trends hold up, the markets are primed for a longer-term up swing.

After a five-month run up in most everything, commodities and the stocks in the companies that mine, transport, process, and sell them, are still an attractive area to consider thanks to the fact that China (and I’m waging our own domestic economy ere long) is back on a growth track.

China’s activity puts a premium price on commodities today and down the road. Even without high demand, supply for hard commodities like steel and soft commodities like sugar are arguably stretched to the breaking point.

I’m particularly interested in investing in commodities that China consumes but doesn’t produce enough of: a smart play in its own right. But, with the projected growth of emerging market consumers, and the re-emergent growth of US and possibly European consumers, all the world is a commodity stage.

Claymore/Beacon Global Timber (NYSEArca: CUT) seeks investment results that correspond to the price and yield performance of the Beacon Global Timber Index, which is made up of companies that own or lease forested land and harvest timber for the production of wood-based products. The fund began trading in November 2007 and has a market value of almost $78 million. The top country representations are the US (27.4%), Japan (19.2%), Sweden (8.9%), Brazil (8.8%), and Finland (8.7%).

Claymore S&P Global Water (NYSEArca: CGW) seeks investment results that correspond to the price and yield performance of the S&P Global Water Index, which is made up of companies that deal with water utilities, infrastructure, equipment, instruments, and materials. It began trading in May 2007 and has a market value of over $178 million. The top country representations are the US (38.8%), Britain (19.2%), France (12.4%), Japan (7.9%), and Switzerland (5.4%).

United States 12 Month Oil (NYSEArca: USL) seeks investment results designed to track the price of light sweet crude oil, measured by 12 futures contracts consisting of the near-month contract to expire and the contracts for the next 11 months. It began trading in December 2007 and has a market value of $177 million.