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I have been toying with buying a commodity fund for the longest time. Was thinking of buying PCRDX. I'm going to take a closer at ARCNX. It's really nice it is possible to buy at Scottrade for low amount.
As a user of Vanguard Brokerage Service AQR Class N funds all carry a $1M minimum (though ARCNX is not currently offered). However PIMCO Institutional class funds carry a $25k minimum. As M* only show TDAmeritrade in their purchase page are there other brokerage options with lower minimums versus going to Advisors for AQR Funds ?
Reply to @STB65: Just a look at how it's done initially, but of greater interest, a look at how it's positioned versus a well-known benchmark index (DJ-UBS)
Reply to @Old_Joe: AQR funds initially were $5K minimum and open to retail investors. Not that long (I forget the time period, but it had to be less than a year?) after the minimum was raised to $1M and the funds were then primarily geared towards advisors/institutional. The reason for the change was never stated, although maybe just not enough retail interest. The minimums today, however, vary all over the place.
I just wouldn't go the ETF route for commodities, as many of the commodity ETFs generate a K-1 form at tax time, which probably comes as a surprise to many investors who are using them for short-term trades. All of the ETFs at the link below generate a K-1 (which I think should be indicated on brokerage pages for these products.)
Reply to @scott: ETNs do not generate K-1. iPath Barclays have a lot of them. Ordinary income, close correlation to benchmark. Barclays credit risk of course -- just like any corporate bond would have.
Anyone familiar with what role dividends play in each of these funds? Below is a link to PCRDX's dividend payouts over the last 7 years. PCRDX has a stated yield of almost 19%. I typically repurchase shares with these dividend payouts but, if I were a retiree; would these yields be sustainable? I notice they vary in amount almost every quarter. Anyone aware as to how they are calculated.
Scott, does AQR pay a dividend and is that an important criteria to you?
The Pimco fund (as well as a lot of the derivatives-based stock funds from Pimco) has had a history of enormous distributions at times, but they are not likely to be consistent. There was one last December (I believe) that was about 11%. Some discussion about the source of the distributions (some of which are certainly from the actively managed collateral) can be found here: http://www.bogleheads.org/forum/viewtopic.php?p=777331
I do expect some distributions from the AQR fund are likely, but I don't expect the level of distributions as seen from the Pimco fund, which has generated far more in the way of distributions than any other fund in the category. I do place a fair amount of importance on dividends, but am not really concerned whether or not the AQR fund produces a significant yield (or really any yield.)
Comments
Dow Jones-UBS Commodity Index Total
Return (%)
Market Value Weighted
Energy 30
Natural Gas 10
Crude Oil 8
Crude Oil - Brent 5
Unleaded Gas 3
Heating Oil 3
Livestock 6
Live Cattle 4
Lean Hogs 2
Grains 22
Wheat 6
Corn 7
Soybean 9
Industrial Metals 19
Aluminum 6
Copper 7
Zinc 3
Nickel 2
Precious Metals 13
Gold 10
Silver 3
Softs 7
Sugar 4
Cotton 2
Coffee 2
Vegetable Oil 4
Soybean Oil 4
Hold on- looked again- "institutional customers only".
I just wouldn't go the ETF route for commodities, as many of the commodity ETFs generate a K-1 form at tax time, which probably comes as a surprise to many investors who are using them for short-term trades. All of the ETFs at the link below generate a K-1 (which I think should be indicated on brokerage pages for these products.)
http://etfdb.com/2012/etf-tax-tutorial-complete-list-of-etfs-that-issue-a-k-1/
Scott, does AQR pay a dividend and is that an important criteria to you?
PCRDX Dividends
http://www.bogleheads.org/forum/viewtopic.php?p=777331
I do expect some distributions from the AQR fund are likely, but I don't expect the level of distributions as seen from the Pimco fund, which has generated far more in the way of distributions than any other fund in the category. I do place a fair amount of importance on dividends, but am not really concerned whether or not the AQR fund produces a significant yield (or really any yield.)