Top Performing Commodity ETFs

August 04, 2017

It's much too early to say the commodities rut is over. By and large, the asset class remains out of favor with investors, and even on a performance basis, things simply haven't been that encouraging.

Every single broad-market commodity ETF is down in the year-to-date period through July. Losses range from less than 1% for the ETRACS UBS Bloomberg Constant Maturity Commodity Index TR ETN (UCI) to 9.5% for the GS Connect S&P GSCI Enhanced Commodity TR Strategy ETN (GSC).

In many cases, individual commodities are doing even worse than the broad indices suggest. The most widely followed commodity in the world, crude oil, is down about 6.6% through the end of July, fueling a 12.3% loss for the United States Oil Fund (USO).

The United States Natural Gas Fund (UNG) is down 32.3%; the iPath Pure Beta Sugar ETN (SGAR) is down 25.1%; and the United States Agriculture Index Fund (USAG) is down 7.1%.

Improvement Since Bloodbath

All that said, this isn't a story about how bad commodities are doing. That's because they aren't doing all that bad―at least compared with the bloodbath in 2014 and 2015.

Commodities need to be looked at in the context of cycles, and if 2016 was a year of across-the-board recovery from extremely oversold levels, 2017 is shaping up to be a year of moderation, with traders being more discerning about which commodities to buy and sell.

Even though many commodities have pulled back this year, plenty have climbed higher. Those are the commodities we'll highlight here.

Palladium At 16-Year High

At the top of the heap is a precious metal that's used primarily as an autocatalyst in gasoline vehicles―palladium. The ETFS Physical Palladium Shares (PALL), with its 31% gain for the year, is far and away the top-performing commodity ETF of the year.

Earlier this summer, palladium prices reached as high as $917/oz, which is the richest price since 2001. Sister-metal platinum now trades at a mere $50 premium to palladium, compared with an average premium of $775 over the past decade.

 

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