New Commodities Vehicles: How Markets Have Responded to Revenue Ruling 2006-1
Author: Robert Gordon.
Source: Volume 24, Number 02, Winter 2007 , pp.164-167(4)
< previous article |next article > |return to table of contents
Abstract:
Revenue Ruling 2006- 1, issued to Pimco, stated that after June 30, 2006, mutual funds could not use income or gain from swaps on commodity indexes to meet the income test for mutual fund status. The same rules already applied to commodity futures. The June 30 deadline was later extended, but the ruling had a chilling effect on new investments and prompted mutual funds to change the vehicles they used to gain exposure to commodities. On the positive side, the ruling also spurred the development of innovative financial products designed to offer exposure to the commodities sector. Several new products may allow investors to approach commodities more cost-efficiently than ever.Keywords: Index Tax Treatment; Barclays i-Path ETNs; Deutsche Bank Commodity Index Tracking Fund; Commodity Mutual Funds
Affiliations:
1: Twenty-First Securities Corp.