$24.21
$26.19
bear $24.21
base $25.78
bull $26.19
margin of safety $20.00
market price* $33.74
Business condition attached to the margin of safety
The market price is at or below the margin-of-safety price while also standing at least 20% below the Fund's most recently published net asset value per share, with creations and redemptions by Authorized Participants still operating normally. A price fall that merely tracks a fall in net asset value (i.e. lower commodity prices) does not qualify.
What it is. Invesco DB Commodity Index Tracking Fund is not an operating company. It is a commodity pool, operating since January 31, 2006, that holds exchange-traded futures on a broad basket of energy, metals and agricultural commodities weighted to follow the DBIQ Optimum Yield Diversified Commodity Index Excess Return: crude oil, Brent, heating oil, gasoline and natural gas; gold, silver, copper, aluminium and zinc; corn, wheat, soybeans and sugar, with the 2025 annual report also showing returns for components such as coffee, cocoa, cattle and platinum. The index's 'optimum yield' rule picks, for each commodity, the delivery month that best limits the cost of rolling into new contracts when later months are priced higher (contango) and captures the gain when they are priced lower (backwardation). The money not needed as futures margin sits in US Treasury bills, money-market funds and Treasury-bill ETFs. A shareholder owns a proportional slice of that pool. At June 30, 2026 the fund held $1,576 million of net assets, or $26.60 per share, up from $22.40 at the end of 2025. What it earns. The only steady income is interest on the Treasury collateral: $51.8 million in 2025, about 4.1% of average net assets, against a management fee of 0.85% a year (net expenses of about 0.82% after the manager's waiver of fees on affiliated money-market holdings, plus brokerage). That left net investment income of 3.26% of net assets in 2025, and 2.72% annualised in the first half of 2026 as Treasury bill yields came down. Most of that income is paid out: distributions were $40.6 million in 2025 and $68.1 million in 2024. Everything else in the fund's results is gains and losses on the futures, which is simply the movement in commodity prices plus the roll effect. Because there are no operating earnings, we do not apply our usual owner-earnings approach. How we value it. We do not forecast commodity prices; that would be a view on the market, not on this fund. What a holder owns today is the net asset value, which Authorized Participants can create or redeem in blocks of 50,000 shares, keeping the share price close to it. We therefore carry the latest net asset value forward at the fund's net Treasury income (interest minus fees) and discount it at our 6% rate over the time a holder would wait to realise it. Because the collateral yields less than 6%, the longer the wait, the more the value falls below net asset value. The fund's filings describe contango and backwardation but do not report the roll effect as a separate number, so we neither credit nor charge it. Bear case, $24.21: a three-year wait at today's net income rate of 2.72% after fees.
Base case, $25.78: a one-year wait at 2.72%.
Bull case, $26.19: a six-month wait at the same rate. The cases are close together because the fund's own economics are simple and visible; the real uncertainty lies in commodity prices, which these figures deliberately leave out. What would make this wrong. The share price will move with commodity futures, often sharply: total returns were -12.0% in 2018, +12.2% in 2019, -8.0% in 2020, +41.3% in 2021, +19.7% in 2022, -6.2% in 2023, +2.0% in 2024 and +8.4% in 2025. Our figure is an estimate of what the pool is worth at its last reported net asset value, not a prediction of where it will trade. Persistent contango across the basket would erode value over time, and the fund could not quantify that cost from its reports. The price could also drift away from net asset value if creations and redemptions were suspended, if Authorized Participants withdrew, or if the fund hit futures position limits, all risks the fund discloses. Lower Treasury bill yields would shrink the income cushion, which has already fallen from 4.1% to about 3.5% before fees. Margin-of-safety price. A fund that tracks its net asset value can only produce 20% a year if the price stands at a discount to that value and the discount closes. The redemption process is what closes it. The margin-of-safety price is $20.00, about 22% below our base case, and it applies only if that price is also at least 20% below the fund's most recently published net asset value. A price that falls simply because commodity prices fell is not a bargain on this reasoning.