Top Performing Commodity ETFs In 2016

The rebound in commodities this year has been surprising. After falling to jaw-dropping depths in January, the asset class roared back in the last few months.

For the first time in five years, commodities are broadly outperforming equities. That said, as is usually the case, the dispersion of returns between the various commodities is great.

Silver Leads, NatGas Lags
In the ETF world, for example, the top-performing nonleveraged/noninverse commodities fund, the ETFS Physical Silver Shares (SIVR | A-100), is up 24.9% year-to-date, while the worst-performer, the United States Natural Gas Fund (UNG | B-94), is down 22.8%.

SIVR, the cheapest silver ETF on the market, benefited from the surge in the gray metal. Like gold, silver rallied this year amid concerns about the economy, low-to-negative interest rates and the depreciation of the U.S. dollar.

On the flip side, UNG suffered due to plunging natural gas prices, which hit a 17-year low in March. Record production and a mild winter hit the heating fuel from both the supply and demand side.

YTD Returns For SIVR, UNG

Tin And Nickel Quietly Rally

Following closely behind SIVR and the other silver ETFs is the iPath Bloomberg Tin Subindex Total Return ETN (JJT | F-96), with a gain of 22.2%.

One of the lesser-known metals, tin doesn't garner many headlines, even when it's rising notably. JJT is the only product that tracks tin futures, but it has paltry assets under management—about $2 million.

After tin, the second-best-performing base metal fund is the iPath Pure Beta Nickel ETN (NINI | D-99), up 6.4% so far this year, but it too has seen little in the way of interest or assets.

YTD Returns For JJT, NINI

Gold And Platinum Shine

In contrast to tin and nickel, there's been no shortage of interest in gold this year. The yellow metal this week topped $1,300 for the first time since January 2015, lifting the iShares Gold Trust (IAU | B-100) with it.

IAU, the lowest-cost fund in the gold segment, climbed 20% so far in 2016, and garnered inflows of $1.5 billion in the period, according to FactSet. That's second only to the $6.9 billion that flowed into the giant in the space, the SPDR Gold Trust (GLD | A-100).

Investors, fearing another big stock market correction after seeing two in the last eight months, may be hedging their bets using these gold ETFs, and precious metals ETFs in general.

Platinum is another precious metal that's risen strongly in 2016. In turn, the ETFS Physical Platinum Shares (PPLT | A-100) has advanced 18.7% year-to-date.

YTD Returns For IAU, PPLT

Oil Almost Doubles

Just when everyone thought it could only go lower, oil prices staged a sharp comeback on the back of sinking U.S. output, which hit the lowest level in more than a year and a half last week.

From their lows of around $27/barrel in January, Brent crude oil prices reached as high as $48.50 last week―a whopping 79% increase.

Unfortunately, due to the effects of contango, and to the fact that the rally started later in the year, ETF investors who invested in oil at the beginning of 2016 didn't capture anything close to that impressive gain.

The United States Brent Oil Fund (BNO) "only" has increased by 12.3% year-to-date, but that's still enough to make it one of the top two energy ETFs in the period, just behind the 13% return for the United States Diesel-Heating Oil Fund (UHN | C-97).

YTD Returns For BNO, UNH

Agriculture Joins Advance
Out of all the agriculture ETFs available, the iPath Pure Beta Sugar ETN (SGAR | D-84) has done the best, gaining 13.8% on the year. That's followed by the Teucrium Soybean Fund (SOYB | F-20), which advanced 11.8%.

Weather is frequently a big driver of agricultural commodities, and this year has been no different. A drought in India pushed sugar to its highest level in 18 months, while floods in Argentina sent soybeans to a nine-month high.

YTD Returns For SGAR, SOYB

Best Broad Commodity ETF

Though single-commodity ETFs are far and away the best performers this year, it's worth mentioning the best broad commodity fund of 2016 so far: the iPath Pure Beta Broad Commodity ETN (BCM | C-24), with a gain of 10.1%.

BCM attempts to beat the Barclays Commodity Index by choosing futures contracts with the least contango. The ETF weights its holdings based on liquidity and caps the weight of commodity sectors at 35%.

This methodology gives BCM a much greater weighting in gold and silver compared with other broad commodity ETFs, and helps explain its outperformance this year.

YTD Returns For BCM

Contact Sumit Roy at [email protected].