Exchange Traded Funds, ETFs, are baskets of stocks that track a particular index and their shares freely trade on an Exchange. Most ETFs currently available track various stock indices, such as the S&P 500, or more narrow indices, such as the Dow Jones Technology Sector or the Dow Jones Healthcare Sector. The number of ways the world's stock markets can be sliced and diced are virtually limitless, which explains the recent proliferation of ETFs tracking some specialty subset of a market. As we mentioned in our last segment, you can even buy foreign real estate ETFs now.

The most recent entry starting to gain momentum are Commodities-based ETFs. Commodities, such as oil, gold, or wheat for example, have previously only been available to sophisticated investors, Speculators or Hedgers, that understood the Futures Markets, Rolling contracts, Margin Requirements, and other very technical concepts that could make one a lot of money or bankrupt them just as quickly if they did not know what they were doing. The Hollywood movie Trading Places with Eddie Murphy and Dan Aykroyd probably best comically exemplified the "old boys" club of commodities traders.

Now, ETFs allow Average Joe to take a position in a particular commodity or basket of commodities and not have to worry about margin calls or contract expirations. For example, PowerShares launched on January 5th seven sector-based commodity ETFs tradeable on the American Stock Exchange, tracking such commodities as gold, silver, corn, and wheat. Somewhat similar to ETFs are ETNs, or Exchange Traded Notes, pioneered by Barclays. They too track a specific index and trade on an Exchange, but they have bond-like characteristics and the quality of the Issuers' credit becomes important. Regardless, ETF or ETN, both now give access to select Commodities Markets.

So why should investors care? Well, if you have a strong opinion as to the future direction of a particular commodity, you can easily take action on it. Also, historically, commodity indices are typically not perfectly correlated with the Stock Market, meaning that they both do not go up or down the same amount at the same time. So, the addition of commodities may add some stability to one's overall portfolio.

Now, having an opinion or smoothing out one's portfolio does not absolve anyone of personal responsibility. Although it is now not necessary for the average investor to be an expert on the intracies of the Futures Markets, you still should have a good understanding of Commodities ETFs in regards to risk and expenses. Some websites we suggest you take a look at without endorsing anyone in particular are: www.ishares.com, www.ipathetn.com, and www.xtf.com .

Click Here to View the YouTube Video News Release