Commodity ETFs YTD: Solar Funds Shine

September 27, 2013

No single sector survived the first three quarters of 2013 without some damage, but some fared much better than others.

With the third quarter of 2013 nearly behind us, it’s time to take a retrospective look at funds’ performance so far this year, and anticipate how the final quarter will play out.

Commodity ETPS—which invest in everything from cows to natural gas to gold mines and to the physical palladium that’s used to make cars—are an especially telling corner of the ETF universe. These funds tend to be incredibly sensitive not just to movements in the markets, but global tension and the fluctuations of the climate.

The corner of the market that includes commodity funds is a small but growing niche, currently home to almost 260 exchange-traded products. Overall year-to-date performance from that group of ETPs is impressive, but not surprising considering the global atmosphere.

The 10-worst-performing commodity funds so far in 2013, excluding leveraged and inverse funds, were all baskets of gold and silver miners, and the 10-best nonleveraged or inverse commodity ETPs were clean energy funds.

To get a better feel for just how the commodity corner is shaping up in 2013, we examined not only the 10 best and worst overall funds, but the three best and worst ETPs from each commodity sector: agriculture; broad market (multicommodity) baskets; energy; industrial metals and precious metals.

On a sector-by-sector basis, things got pretty interesting. To exclude red herrings, we omitted leverage and inverse products, unless otherwise noted on charts or in writing.

Agriculture funds, which are incredibly sensitive to weather conditions, had a pretty even spread between the worst and best year-to-date performers. The First Trust ISE Water fund (FIW | B-48) led the ag rally with a 21.52 percent YTD spike, and the worst ag fund so far in 2013, the iPath Dow Jones-UBS Coffee Total Return ETN (JO | B-91) has slid 25.63 percent in that same time frame.

Ag Best Worst

However, when shifting sights to broad market baskets, which hold commodity securities and notes from across the commodity spectrum, the picture wasn’t nearly as balanced. Multicommodity baskets have generally underperformed due to performance struggles within the specific sectors.

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