The fund tracks a DBIQ energy commodity index and holds futures on crude oil (West Texas Intermediate and Brent), heating oil, gasoline and natural gas together. The core concept is to offer exposure to a basket of energy products in a single vehicle, rather than to one energy source.

It suits investors who would rather spread exposure across the energy sector as a whole than bet on any single energy source, and who want to raise their allocation to real assets during inflationary periods.

It is an ETF managed by Invesco using a passive (index-tracking) approach.

The fund includes futures on multiple energy products according to index rules, and selects contracts using an optimized roll approach that aims to reduce losses when rolling over expiring contracts. Through this, it seeks to ease the roll cost burden that arises during contango periods.

• Basket exposure combining multiple energy futures
• An optimized roll approach that manages rollover costs

Assets under management (AUM) stand at $149.2M, and the expense ratio is 0.77% per year.

Compared with USO, a single crude oil product, or UNG, a natural gas product, it is diversified across an energy basket and therefore tends to depend less on the volatility of any individual energy source.

Energy commodity prices have shown highly volatile movements driven by supply issues, geopolitical risk and the economic cycle, and are characterized by wide price swings rather than a clear direction. Recently as well, the trend has swung back and forth with the movements in oil and natural gas prices.

When inflation concerns come to the fore, money tends to flow into commodity funds on demand for real-asset hedges. Conversely, when worries about an economic slowdown grow, fund flows can weaken on expectations of shrinking energy demand.

Its strengths are energy sector diversification and its inflation-hedge character, while its weaknesses are the rollover costs and high volatility typical of commodity futures.

Beyond USE, the comparison product shown in the table, you can also consider products such as DBC, a broad commodity fund that holds a wide range of commodities, USO, which offers single crude oil exposure, BNO, which is centered on Brent crude, UNG, which offers natural gas-only exposure, and UGA, which offers gasoline exposure. The difference is that DBE itself is diversified across an energy basket, unlike these single-product funds.

Here are the points to review before investing in DBE. Energy commodity futures funds differ greatly in nature from equity ETFs, so you should carefully check price volatility, expense costs, futures rollover characteristics and the tax reporting structure in advance.

Energy commodity price movements and futures rollover costs are the main factors that drive performance. Because it has a strong directional-bet character, it is more appropriate to approach it as a satellite holding than as a long-term core asset.

It is a suitable satellite holding for investors who want diversified exposure across the energy sector or who want to hold an inflation-hedge allocation. If you want a bet on a single energy source, products such as USO and UNG are alternatives, and if you want broad commodity exposure, products such as DBC are alternatives.