Top 10 Commodity ETFs Of 2015

July 08, 2015

After slipping for four-straight years, there's still no sign of a major turnaround in commodity markets so far in 2015.


Of all of the broad-based commodity ETFs, each of them finished the first half of the year in the red, with losses ranging from about 1 percent for the iPath Pure Beta Broad Commodity ETN (BCM | C-34) to 5.7 percent for the First Trust Global Tactical Commodity Strategy (FTGC | C-29).


Still, a handful of other commodity exchange-traded funds did manage to finish the first half of the year in the green, which is a feat in and of itself given the head winds the asset class is facing in the form of booming supplies and the slowdown in China. Returns quotes below are as of June 30


10. RBS-Rogers Enhanced Energy ETN (RGRE| F-63) +1.62%

After plunging late last year, energy prices stabilized during the first half of the year, allowing the broad-based energy ETN, RGRE, to eke out a gain. By optimizing contract selection based on various factors, RGRE aims for outperformance against the typical front-month roll strategy. However, the product has failed to attract investor interest, and remains tiny, with less than $3 million in assets.


9. ELEMENTS MLCX Grains - Total Return ETN (GRU | D-93) +2.27%

After trading flat to lower during most of the first half, grain prices spiked dramatically during June, boosting GRU into the green. The USDA lowered its outlook for supplies after excess rains in the Midwest growing regions raised concerns about damage to crops. This fund also has a meager $8 million in assets under management.


8. Credit Suisse X-Links Silver Shares Covered Call ETN (SLVO | D-41) +4.16%

Silver prices didn't do much during the first half of the year. A lack of catalysts kept prices flat, and most of the ETFs tied to the metal were likewise unchanged in the period. However, SLVO managed to bolster returns with its unique strategy of selling covered calls.


Indeed, such a covered-call strategy tends to work best when volatility is low, as has been the case in the silver market. SLVO's strategy entails selling 6 percent out-of-the-money covered calls on its silver position each month. This generates cash flow for investors, but limits upside should silver prices rise beyond the strike price of the calls. The fund has $26.5 million in AUM.


7. iPath Pure Beta Cotton ETN (CTNN | D-81) +4.83%

Two big supply-side stories kept the cotton market on edge during the first half, with the bullish side ultimately winning out. Weighing on the market was news from China that it would sell off a portion of official inventories as the government continues to unwind its state reserves program. At 10 million metric tons, China's official reserves of cotton are the largest in the world, representing 40 percent of the global total, according to Reuters.


However, offsetting the news from China were data from the USDA that showed U.S. farmers would plant the least amount of cotton this year since 1983.


CTNN is one of two cotton exchange-traded cotton products on the market. The ETN attempts to boost returns by buying futures contracts with varying expiration dates. In this case, the optimized strategy underperformed the front-month roll strategy of the other cotton ETN. However, its scant AUM of $2.6 million and a trading spread of 5.34 percent make it notable.


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