In a banner year for financial assets, performance for commodity ETFs has been just “okay.” The WisdomTree Enhanced Commodity Strategy Fund (GCC), the best performing broad commodity ETF of the year, rose 17.5% in the year-to-date period through Dec. 11.
Meanwhile, the largest ETF in the broad commodities category, the $4.3 billion Invesco Optimum Yield Diversified Commodity ETF (PDBC), rose a mere 2% in that period.
Weakness in major commodities like crude oil, natural gas, wheat, and soybeans has weighed on the group as a whole.
On the other hand, robust performance for precious metals like gold has acted as a tailwind for the group, offsetting the losses in other commodities.
Such varying performance in typical in commodities markets. Outside of periods of big economic shifts, individual commodities tend to do their own thing.
This year, tepid demand growth has weighed on oil prices, while strong demand for gold from central banks has boosted prices of the yellow metal.
Indeed, many of the top performing commodity ETFs this year are gold ETFs. Most gold funds, including the SPDR Gold Trust (GLD), were up between 31% and 32% in the year-to-date period through Dec. 11.
The only group of commodity ETFs to perform better (excluding leveraged and inverse ETFs) is silver funds.
The iShares Silver Trust (SLV) is up just over 33% so far this year.
However, unlike gold, which is at record highs, at $31/oz, silver is still far off its all-time highs of around $50.
Outside of precious metals, ETFs tied to base metals have also done decently. The Invesco DB Base Metals Fund (DBB) is up 11.5% this year, while the United States Copper Index Fund (CPER) is up by 10.2%.
Interestingly, the United States Oil Fund (USO) and the United States Brent Oil Fund (BNO) are up 10% and 8%, respectively, even though the price of oil is down this year.
Futures contracts for both oil benchmarks have been in backwardation this year, boosting returns for ETFs that roll their positions from one contact to the next.
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