A column in today’s Financial Post (also available here) mentioned the RBC Principal Protected Commodity Linked Note, through which Canadian small investors can get exposure to a basket of commodities. The note takes a long-only, equally weighted position in the following commodities: oil, natural gas, lead, copper, aluminium, nickel and platinum. It provides a 125% exposure to the commodity basket and 100% principal protection if held to maturity in 5 years. The note is inexpensive as the only fees paid are the 3% commission to selling agents.

Since, the minimum investment is only $1000, the note provides a great way for small investors to invest in commodities, which are poorly correlated with stocks and bonds. It’s too bad that the Post saw it fit to run a story today on an investment product that closed on July 26, 2005. Well, I am hoping that RBC will soon issue another series of these notes.

This article has 8 comments

  1. Hey – I love reading your blog. I’m an expat Canuck living in the States.
    Do you know of similar products available to US investors?

    Thanks.

  2. Amit: Thank you for your kind words.

    I’ve read good things about PIMCO Commodity Real Return Fund, which is based on a index and the Oppenheimer Real Asset Fund which is actively managed. To my knowledge, there is no ETF based on commodities.

  3. Could you please explain how one buys this product?

  4. Anon: The press release mentions that this product is available for self-directed investors. There is also a contact number at the end of the page.

  5. I tracked down the info that there is a Series 2 Note that is closing on September 12th. regards from Calgary….

  6. Since you are interested in commodities, I assume you are aware of the Roger’s Raw Materials Index. It acts as an ETF on commodities.

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