2012 Commodity ETF Launches: Winners and Losers

The ETF world cracked commodity investing wide open. It used to be that commodity exposure was left for active traders and hedgers who had the know-how and time to play the futures market, leaving the little guys out to dry. Now, investors have the ability to invest in anything from physical gold, to leveraged copper all through an ETF ticker. As 2012 has progressed we have seen a fair amount of new commodity products hit the market. Below, we list the commodity products that have emerged from the pack, and those who are still struggling to stay afloat [for more commodity ETF news and analysis subscribe to our free newsletter].

Winners

The winners are quantified by either a healthy jump in assets, or trading volume that ensures a fund will be around for some time to come.

  • MSCI Global Select Metals & Mining Producers Fund (PICK): This fund invests in mining companies all around the world that extract diversified metals with the exception of gold and silver. Its strategy has stuck with many investors as it has been able to amass $120 million in assets since launching in January [see also Three Reasons Why Gold Is Overvalued].
  • UGAZ/DGAZ: This ETN pair offers 300% and -300% exposure to natural gas futures, a commodity that has had an extremely volatile year. The funds were designed as trading tools, so they do not have much in the way of assets, but each trades more than 100,000 times per day, cementing their place in the ETF world.

Losers

This section has nothing to do with the quality of the fund, but rather outlines those that have struggled out of the gate in 2012.

  • United States Agriculture Index Fund (USAG): This fund invests in 14 different commodities, including corn, soybeans, and more. Unfortunately, its strategy has not caught on yet, as the fund has less than $3 million in assets and trades less than 1,700 times each day. Despite its problems getting going, USAG is up nearly 18.5% in the last 13 weeks [see also Jim Rogers: The Agriculture Industry is Doomed].
  • Teucrium Agricultural Fund (TAGS): This ETF invests in Teucrium’s four other agricultural products, making it a fund of funds. Like USAG, this ETF has less than $3 million in total assets and has a one month ADV of 600. It should be noted that the fund has been a solid performer thus far, jumping more than 17% in the last 13 weeks.
  • LCPR/SCPR: This pair of copper ETNs, which offer 200% and -200% exposure to futures on the metal, launched alongside UGAZ and DGAZ, but they have not found the same success. Both ETNs have less than $1 million in assets and trade less than 600 times per day, putting them in danger of being shuttered in the near future.

Close Calls

The verdict is still out on these funds, as only time can tell if they will fall under the winners or losers moniker.

  • Sustainable North American Oil Sands ETF (SNDS): One of the more unique launches of the year, this fund invests in oil sands firms domiciled in North America. The ETF currently trades around 6,500 times per day but only has $1.1 million in assets. SNDS launched in mid-June so it is hard to get a gauge for how well it will perform, but its decent trading volumes are certainly an encouraging sign [see also 25 Ways To Invest In Crude Oil].
  • MSCI Global Agriculture Producers Fund (VEGI): This fund focuses on global agriculture firms and has been on the market since late January. For the time being, making a call on its performance is tough; VEGI has just $10 million in assets but has traded an average of 11,500 each day for the trailing month. Either way, if it is unable to gather a larger base of assets, VEGI could find itself in a pickle relatively soon.
  • MSCI Global Gold Miners Fund (RING): Another in the line of iShares funds that debuted at the end of January, RING invests in global gold miners, but excludes those who hedge gold prices. The fund has just over $32 million in assets and trades more than 7,000 times per day. Usually, $25 million in assets is a threshold that issuers like to pass so RING has a handle on that aspect. What remains to be seen is if this product can find a place in the investing universe competing with the likes of GDX and GDXJ who have a combined $11.6 billion in assets.

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Disclosure: No positions at time of writing.

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