At a time when the greenback is marching higher, supported by an improving U.S. economy and rising rate concerns, launch of a commodity-focused ETF seems ill-timed since commodities normally carry an inverse relationship with the greenback. Plus, a sluggish global backdrop will likely keep consumption low resulting in a rough stretch for commodities. The latest oil rout and continued decline in precious metals reinforce such downbeat sentiment over commodities.

Still, the fourth largest provider of ETFs, Invesco PowerShares — one of the best known issuers for its lineup of smart-beta products is looking a little further ahead and it rolled out a commodity ETF DB Optimum Yield Diversified Commodity Strategy Portfolio (PDBC) on November 7, 2014 (read: Global X Plans Emerging Market Bond, Commodity ETFs ).

Volatility levels might flare up in the coming days on rising rate concerns in the U.S. and policy differential in various parts of the world. In such a situation, the issuer believes that since historically commodities have shown low correlation to stocks and bonds, broad-based commodity coverage like what PDBC has, might expand a portfolio’s returns and enhance investors’ overall risk-adjusted returns.

Thus, for investors interested in the new addition in the commodity world, we have highlighted some of the key details:

PDBC in Focus

This actively managed ETF looks to offer long-term capital gains by following an investment strategy intended to beat the performance of the DBIQ Optimum Yield Diversified Commodity Index Excess Return. The index consists of futures contracts on 14 actively traded commodities across the energy, precious metals, industrial metals and agriculture sectors, per the issuer .

The fund presently has 24 holdings and charges 59 bps in fees.  As far as holdings are concerned, WTI crude, Gasoline, Heating oil and Brent Crude get double-digit weights in the ETF. Gold takes the fifth spot in the ETF with about 8.05% exposure.

This new fund takes a unique approach to commodity investing. Per the issuer, most ETFs investing in commodity futures are structured as limited partnerships and involve a Schedule K-1 form, but PDBC is prepared more efficiently and does not need a Schedule K-1 form from investors. The product looks to issue a Form 1099-DIV (1099) to shareholders at the end of the calendar year instead.

How Does it Fit in a Portfolio?

The latest addition from PowerrShares is an intriguing option for investors seeking exposure to multiple commodities. This asset class could be interesting options for investors who believe that a growing global economy as well as population — though at a sluggish pace — will increase demand for commodities (read: Introductory Guide to Soft Commodity ETFs ).

This product in particular may be an interesting choice for those looking to go beyond ‘regular’ commodity ETFs on tax issues. However, the product might not be a good choice for investors who anticipate a strong dollar or decelerating emerging markets (which is presently the case), as either of these will weigh on commodity-focused products.

ETF Competition

For investors seeking other broad commodity ETFs, there are plenty on the market.  Broad competitors include DB Commodity Index Tracking Fund ( DBC ) from PowerShares and GSCI Commodity-Indexed Trust Fund ( GSG ) from iShares, both of which require shareholders to have a Schedule K-1 form. Another top asset gatherer Dow Jones-UBS Commodity Index TR ETN ( DJP ) also appears as a threat (read: 5 ETFs for a Relaxed Retired Life ).

Cost should not be an issue for the newly launched product in making a place in investors’ portfolio as despite having a relatively less regular structure, the product is priced competitively. Its expense ratio of 59 bps is lower than the average fees charged by the commodity ETF space.  Each of the rival products mentioned above charge higher than the newly launched ETF.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report