We represent each asset class on our platform using the largest, most liquid ETF available (read why). Currently, we represent the asset class “diversified commodities” with the Invesco ETF DBC, but after this weekend, we’ll be changing to a different Invesco ETF PDBC.
There are two reasons for this change:
For non-US investors, there are major changes in the tax treatment of ETFs that qualify as “Publicly Traded Partnerships” (PTPs) coming on January 1st. Gross proceeds from sales and certain distributions will be subject to a 10% withholding. More: https://ibkr.info/node/4706To the best of our knowledge, DBC is the only PTP ETF we currently use to represent an asset class on our platform. There are also multiple PTP ETFs that we list as asset class alternatives, including DGL (gold) and GSG (commodities).
As previously mentioned, we represent each asset class with the largest ETF in that space. Since launching our site, PDBC’s assets under management have grown significantly larger than DBC’s ($7.3 vs $3.1 billion), making it a better choice for meeting that requirement.Further, both DBC and PDBC track the same underlying index. In terms of historical returns, both have performed very similarly, and there would not be any significant impact to any strategy’s backtested performance.
Practically speaking, especially for US investors, you do not necessarily need to follow suit with this change in your own portfolios. In fact, you may opt to continue trading DBC (or some other alternative) indefinitely. There are some advantages to DBC over PDBC, especially with taxable accounts. As always, the ETFs we show throughout this site are chosen for their size/liquidity, not for their appropriateness to your unique situation. Do your homework.
For non-US investors, we highly recommend that you learn more about the upcoming changes in tax treatment and take whatever steps are appropriate before year end.
And most importantly, note that we are not accountants, and this is not tax advice. Consult your tax professional for guidance on the most appropriate investments for your unique financial situation.
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Calculation note: We buried this one in the footer because only our fellow geeks will care about it. DBC and PDBC are so highly similar in terms of historical returns that we’re just going to “stitch” PDBC asset data on to the end of our historical DBC data (beginning after Friday’s close), rather than replacing all of the asset data for DBC with PDBC. This will ensure that no historical strategy results will change, while still doing a very good job at representing the “diversified commodities” asset class.