Ed Egilinsky, Managing Director and Head of Alternative Investments at Direxion joins Gregg Greenberg of The Street to discuss the benefits and diversification characteristics of commodities.
The Direxion Indexed Commodity Strategy Fund (DXCTX) seeks to match the performance of the Auspice Broad Commodity ER Index (ABCERI), a long/flat commodities index. The long/flat approach provides exposure to commodities that can individually be positioned long or flat (in cash) based upon price trends.
A long/flat approach provides exposure to commodities that can individually be positioned long or flat (in cash) based upon price trends. It seeks to take advantage of individual commodity prices when they rise by going long, and to preserve capital by going flat (to cash) when prices fall.
An investor should consider the investment objectives, risks, charges, and expenses of the fund before investing. Click here to obtain a prospectus.
Diversification does not ensure a profit or protect against a loss.
Correlation – A statistical measure of how two securities move in relation to each other.
Contango – A situation where the futures price of a commodity is above the expected future spot price. Contango refers to a situation where the future spot price is below the current price, and people are willing to pay more for a commodity at some point in the future than the actual expected price of the commodity.
Backwardation – A theory developed in respect to the price of a futures contract and the contract’s time to expire. Backwardation says that as the contract approaches expiration, the futures contract will trade at a higher price compared to when the contract was further away from expiration.
Smart Contract Roll – A futures contract roll approach designed to select cost effective futures contracts to roll into upon expiration of current contract