The Wall Street Journal discussed the twin concepts of contango and backwardation in July. While informative in nature, I can’t help wondering how many people actually got through the entire article.
As far as I’m concerned, if you’re worrying about either one of these words and you’re not a commodities trader, you need to get out more often. Forget you ever heard these terms.
In recent months I’ve written some articles using statistics cobbled together by the website NerdWallet. In May, the site highlighted the 12 worst mutual funds to own, based on a sampling of 13,000. At the very top of the list was the Oppenheimer Commodity Strategy Total Return Fund (QRAAX). NerdWallet went with the “C” class while I’m going with its “A” class. Whatever the class, you should avoid at all costs; there are simply better alternatives.
For instance, I’m a huge fan of the ING Corporate Leaders Trust Series B (LEXCX), which is up 18% year-to-date through Sept. 11. Although it’s trailing the S&P 500 by 152 basis points in 2013, it has beaten the index on an annualized basis in the 3-year, 5-year and 10-year periods. Why do I mention this? Because approximately 40% of assets are invested in commodities-related stocks. You get significant exposure to commodities — with performance to boot.