USCI – The Commodity ETF Evolves

The United States Commodity Index Fund (USCI) began trading last Tuesday (8/10/10).  The fund’s objective is to match the SummerHaven Dynamic Commodity Index Total Return, less expenses.  The underlying index is comprised of 14 futures contracts, selected on a monthly basis from a universe of 27.  Composition of the rules-based index in any given month will be determined quantitatively. Contrary to what you might have read, USCI is not an actively-managed ETF.  The fund’s composition is not determined by manager discretion.  Instead, the holdings are determined by an index and remain static between monthly rebalancings. The prospectus (pdf) elaborates on the fact that no human bias is introduced into the process.  Even its name clearly identifies this product as an “index” fund. That said, the index is dynamic and its…