Will Investors Pour Into The Aluminum ETF As They Do Other Commodity ETF’s?
“Credit Suisse Group will soon offer a new aluminum ETF. It sounds simple. The fund buys aluminum to back its shares. In turn, that will put pressure on the aluminum markets and drive prices higher. At least that’s what is expected,” Bob Irish Reports From Howe Street. “But wait a minute,” says IDE’s Steve McDonald. “Aluminum is already up 50% from its lows. And there are a lot of gray areas here. Does the fund buy aluminum or futures on aluminum? Will it be leveraged? How much?” Bob Irish
“Each of these variables poses a very different risk. And most of us don’t understand the aluminum market well enough to bet one way or the other on how this will work. But that won’t stop investors from pouring in. These packaged products are never as simple as they appear. And they often end up costing people a lot of money. In the ‘80s it was growth funds. The ‘90s gave us tech stocks and funds. The past few years it was real estate,” Irish Reports
“Now,” says Steve, “it’s commodities. Don’t get sucked into the current commodities herd. All herds end up over the cliff.”
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