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No Ides Of March For Commodities ETFs

by
April 2, 2016 1:21 pm
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More than a few asset classes turned in impressive performances in March. Particularly boffo were commodities and some of the corresponding exchange traded products. While the likes of the SPDR Gold Shares (NYSE: GLD) and the United States Oil Fund (NYSE: USO) often garner the bulk of the attention among commodities ETFs, more diversified options were solid last month as well.

 

For example, the PowerShares DB Commodity Index Tracking Fund (NYSE: DBC) gained more than four percent last month. That futures-based ETFs follows the DBIQ Optimum Yield Diversified Commodity Index, granting investors exposure to an array of commodities from gold and silver to corn and oil.

 

“All 14 commodities in the Agriculture (8) and Energy (6) sectors in the S&P GSCI TR gained in March. This has not happened since July 2012. In fact, all commodities inside the agriculture sector have never been positive together in any historical March,” said S&P Dow Jones Indices Global Head of Commodities and Real Assets Jodie Gunzberg in a recent note.

 

DBC devotes over 20 percent of its weight to Brent and West Texas Intermediate oil futures and almost 10 percent to gold. Soaring silver commands 2.3 percent of the ETF's weight.

 

“In the first half of March, the S&P GSCI Total Return had added 9.6% and staged its biggest comeback ever, gaining 18.8% from its bottom on Jan. 20, 2016. Unfortunately, the index gave up 4.3% since March 17, 2016, losing about half its March gain. Despite the loss, the index posted its first positive monthly gain of 4.9% (data ending Mar. 30, 2016) since Oct. 2015. March’s commodity return is historically big and is the biggest March since March 2006, when the index gained 5.1%,” adds Gunzberg.

 

The WisdomTree Continuous Commodity Index Fund (NYSE: GCC) also added more than four percent last month. GCC tracks the Thomson Reuters Equal Weight Continuous Commodity Total Return Index, providing exposure to agriculture, energy, industrial and precious metals commodities.

 

Though energy and precious metals commodities combine for over 29 percent of GCC's weight, investors can use the ETF to bet on an ongoing farm rebound as agriculture commodities (grains and livestock) are over 35 percent of the fund's weight.


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