The Tax Bill of ETFs and ETNs

With the tax deadline rapidly approaching, it is absoltuly essential that investors understand how their exchange traded funds (ETFs) and exchange traded notes (ETNs) will be taxed.

With the vast array of ETFs to choose from, taxes can get tricky. In general the tax treatment of ETFs is relatively simple and is applicable to long-term and short-term capital gains rules and rates. For example if one held the SPDY (SPY) for less than one year, any gains would be subject to short-term capital gains rates and if held for longer than one year, then the gains would be subject to long-term capital gains rates.

Three ETFs To Play Rising Rice Prices

Poor weather conditions around the world may result in a supply shock, pushing rice, grain and other agricultural-based commodities higher and giving positive price support to the ELEMENTS Rogers Intl Commodity Agri ETN (RJA),  the PowerShares DB Agriculture Fund (DBA) and the iPath DJ-UBS Agriculture TR Sub-Idx ETN (JJA).

According to the UN Food and Agriculture Organization, Thailand witnessed the its worst flooding in more than 50 years resulting in nearly 13 percent of the nation’s rice crop to be destroyed.  This is vital to global supply as that Thailand accounts for more than 30 percent of global rice exports. 

Four ETFs To Cash In On Rising Food Prices

Supply shocks over the past two years in wheat and corn continue to take their toll on food prices, which will likely provide positive price support to the iPath Dow Jones-UBS Agriculture Subindex Total Return ETN (JJA ), iPath Dow Jones-UBS Grains Subindex Total Return ETN (JJG),  (DBA), UBS E-TRACS CMCI Food T ETN (FUD) and Market Vectors Agribusiness ETF (MOO).

On the production side, both wheat and corn have taken a major hit over the past couple of years as natural disasters and crop disease have plagued some of the major producing parts of the world.  Russia, for example, witnessed a severe drought over the past few years which has curtailed production of wheat, forcing the Kremlin to halt exporting the commodity to ensure that domestic supply can meet domestic demand.  Similarly, the current drought in Texas is starting to take its toll on corn production keeping prices of corn elevated.  In fact, the Agriculture Department expects a national average corn yield in the US of 153 bushels per acre, nearly 4% lower than its earlier forecasts. 

4 ETFs To Play Rising Meat Prices

Imbalances in supply and demand continue to take its toll on food prices as the price of meat continues to rise, giving positive support to the PowerShares DB Agriculture Fund (DBA), the iPath Dow Jones-UBS Livestock Subindex Total Return ETN (COW), the Market Vectors Agribusiness (MOO) and the PowerShares Global Agriculture Portfolio (PAGG).

According to the United Nation’s Food and Agriculture Organization’s meat index, beef and sheep prices are at an all time high and poultry and pig meat costs are on the rise. On the demand side, demand in much of the developed world like the US remains intact, while demand in the developing world for meat continues to rise.  According to the US Department of Agriculture, demand in Asia, in particularly South Korea, Hong Kong and China continues to rise.  Furthermore, demand is expected to remain elevated in the near-term future as disposable income in developing nations continues to increase.

4 ETFs To Play Coffee’s Jump

Continuing imbalances in supply and demand have pushed coffee prices to 30-year highs and are expected to continue to provide positive price support to the soft commodity. 

Over the past year, coffee prices have nearly doubled as production has suffered due to weather conditions in Colombia and parts of Africa.  In Colombia, storms seen last year damaged harvests curtailing production by as much as 10 percent in the current quarter.  To put it into perspective, output in April from Colombian coffee producers declined by 19 percent from a year earlier.

3 ETFs Influenced By India’s Inflation

Despite witnessing stellar economic growth over the past few years, rising prices could put a damper on India’s future and its exchange traded funds (ETFs).

In general, the global commodities market has witnessed a slight pull back over; however, commodity prices continue to remain elevated putting strain on the consumer. On the consumer side, this drastic increase in prices has been led by a surge in food prices which has been brought on by pure supply and demand forces. Although India is expected to witness a relatively decent annual rainfall building up short-term supply of food and agriculture-based products, weak storage facilities and infrastructure will likely negate any benefits that the nation could reap from increased production. 

Precious Metal ETFs: Ultimate Guide

As economic uncertainty continues to prevail around the world and political instability takes its toll in North Africa and the Middle East, the appeal for gold and other precious metals is expected to continue to remain elevated, pushing up prices.

Gold has appeal for numerous reasons and will likely continue to be the “go-to” precious metal.  The shiny metal offers protection from inflation- a fear that many investors have, a hedge against a falling dollar and has long been a safe haven for Central Banks.   Additionally, a growing middle class in developing nations will likely support its demand.  Good ways to gain exposure to gold include the following:

Four ETFs Impacted By China’s Supply and Demand of Copper

Over the last two years, the price of copper has skyrocketed on the assumption that demand will outpace supply of the industrial metal, however, recent warning signs indicate that copper’s uptrend could come to an end. 

According to Carolyn Cui and Tatyana Shumsky of the Wall Street Journal, the rise in copper prices has primarily been driven by the belief that China has an insatiable appetite for the metal.  This may be true to some extent as that China’s consumption of the metal more than doubled in 2008 and 2009 as the emerging market witnessed exceptional economic growth and urbanization prevailed.  Further price appreciation was supported due to the fact that China’s demand increased while global mine production remained relatively stable growing at nearly 19% between 2000 and 2009 (keeping pace with global consumption). 

5 ETFs To Play Silver’s Shine

Silver has been on a great uptrend, and as inflation fears continue to loom, the dollar remains relatively volatile and political unrest prevails around the world, the precious metal will likely continue to witness price appreciation. 

As a whole, both macroeconomic and microeconomic forces are favorable for silver.  From a macroeconomic perspective, the increases in money supply over the past few years to support the US economy and boost artificial demand are expected to lead to increased prices, making inflation inevitable.  Additionally, the US government is running a budget deficit of more than $1 trillion per year and has been borrowing to fund this spending spree.  This monetizing of debt is more likely than not to support inflation, which will further lead to a reduction in the purchasing power of money, or dollars. 

Three ETFs To Cash In On Rising Beef Prices

An ever widening gap in supply and demand continues to prevail in the US cattle markets, pushing up prices and providing positive support to the PowerShares DB Agricultural Fund (DBA), the iPath Dow Jones-UBS Livestock Subindex Total Return ETN (COW) and the UBS E-TRACS CMCI Livestock TR ETN (UBC).

According to the US Department of Agriculture, beef exports surged by 19 percent last year resulting in the smallest US cattle herd since 1958.  On the demand side, worldwide demand for beef is near an all time highs as purchasing power and the middle class in emerging markets continues to grow.  In fact, demand in Russia, South Korea, Hong Kong and Taiwan has grown at exponential levels, pushing US exports to their highest levels in over seven years.