FINANCE

The CIO says it is holding back massive product exposure amid China’s power crisis


Investors in products should be diversified because China’s power crisis has pushed up global energy and equipment prices, a market analyst said.

Although exchange-traded fund buyers have laundered nearly 12 12 billion in China-based ETFs this year, trying to profit from part of the crisis may not be the best strategy, Dave Nadig of ETF Trends told CNBC’s “ETF Edge” this week.

The firm’s chief investment officer and director of the study said in an interview Monday.

For example, the United States Copper Index Fund (CPER) rose more than 4% last week as investors tried to play the widely used manufacturing metal for profit.

“It’s a market that I think needs an iron belly if you try to make individual calls,” Nadig said. “I think wide, baseline exposure is the way to go.”

Granite shares Bloomberg Commodity Broad Strategy No. K-1 ETF (COMB) fits that description, he said.

Will Rind, founder and CEO of Graniteshares, said in the same interview that a low-cost offer to invest in the futures of 23 products spread across the energy, metals and soft products markets, COMB’s extensive exposure may be right for some investors.

“Of course, there are some more specific investments like gold, for example, like oil. You can get some more specific ways to target different products,” Rind said, whose firm also manages the popular Graniteshares Gold Trust (BAR).

“Whether you’re particularly concerned about energy, whether you’re worried about food prices, whether you’re just worried about inflation, there are ways you can find it in the ETF market,” Rind said.

Another market analyst suggested steering products completely.

“Don’t try to be a hero,” Matthew Bertolini, state street chief at SPDR Americas Research, said in the same interview.

“A lot of people have burned in the past trying to predict the path or pace of prices of different products, especially oil, which is connected to different parts of the global economy, especially what’s going on in China,” Bertolini said.

Instead, he advised investors to consider the impact of commodity price pressures. That could lead to higher inflation and higher prices for consumers, in which case things like Treasury inflation-protected securities could do better, he said.

Bertolini said, “Don’t try to make predictions with so many unknown strangers in the market and just try to figure out a few foundation points in your bond portfolio, which is really hard these days.”



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