Ever since markets crashed in 2008, investors have been slowly increasing their risk appetites, shifting towards more lucrative and risky asset classes such as commodities. Some investments in this category have flourished, while others haven’t fared so well. Natural gas is perhaps the first cringe-worthy commodity that comes to mind as investors witnessed its unprecedented free fall over the last few years. But with NG and some of the other big losers comes a potential buy in opportunity at rock bottom prices. Whether you’re looking for a bargain or simply want to avoid these bad-performing funds, we outline 3 of the worst performing commodity ETPs over the last three years. Note that this list is a bit modified in that we only chose one fund from each commodity type [see also 12 High-Yielding Commodities For 2012].
United States Natural Gas Fund LP (UNG) – Down 86%
No big surprises here: down 86% over the last three years, UNG maintains its title of commodity ETF’s biggest loser. Natural gas has been one of the hardest hit commodities on the market, losing all of its momentum since the recession. And as such, funds like UNG and GAZ have tumbled along side record hitting low natural gas prices. 2012 is proving to be yet another frustrating year for the commodity with natural gas prices already dropping more than 20% on the year [see also 25 Ways To Invest In Natural Gas].
Global Carbon ETN (GRN) – Down 49%
Most investors probably don’t even know what a Global Carbon ETN is, and consequently aren’t too concerned about its placement on this list (unless, of course, they happen to be invested in it). GRN’s underlying assets are comprised of global carbon allowances: credits that essentially allow companies to emit specific levels of carbon from factories and power stations. Essentially, investors in this fund are placing a bet that environmentalism will become a much more prominent issue. As seen with GRN’s dismal performance, that bet failed: the fund currently is down 49% over the last three years, barely has any assets or trading volume, and is likely to shut down barring a major turnaround [see also What The Heck Is A Global Carbon ETN? (And Why Was It Down 25% In June?)].
Dow Jones-UBS Cocoa Total Return Sub-Index ETN (NIB) – Down 18%
Investors in iPath’s NIB haven’t been getting any sweet returns from this cocoa fund, as it has dropped 18% over the last 3 years and has lost over 30% in the last year alone. Cocoa’s decline can most notably be attributed to its largest supplier: the Ivory Coast, a region that is chock-full of risk and political instability. In recent years, the Ivory Coast has seen violent civil wars and extreme economic volatility. From a pure theoretical perspective, a decline in production would yield a jump in cocoa prices. But considering NIB’s poor performance, it seems as though the fund was not able to overcome cocoa’s drastic volatility [see also Three Commodities Ripe With Political Risk].
Disclosure: No positions at time of writing.
[...] Hurricane Season: Weather is quite an obvious price driver of natural gas, as heat waves or extreme colds will drive demand for the fuel. But underneath the weather umbrella (no pun intended) comes hurricane season. Many investors underestimate the impact that hurricanes have on NG, but these natural phenomenons can provide lucrative trading opportunities. A number of NG supply points are located in the Gulf area as well as throughout the Southeast: prime locations for hurricanes. These massive storms have been known to knock out power as well as create a number of other roadblocks for natural gas production, causing prices to react swiftly. Always keep an eye on the storms developing and their paths as it could have a significant weight on the health of your positions [see also Three Worst Performing Commodity ETFs Over The Last Three Years]. [...]
[...] ETFs have also been implicated in creating or adding to market volatility. Commodity ETFs in particular have been singled out for contributing to bubbles and crashes as investors pile into (or out of) funds that hold actual physical commodities or futures contracts. Likewise, many ETFs have become popular with institutions and large traders as arbitrage instruments and sudden large movements in ETF prices can create havoc in the trading of individual stocks [see also Three Worst Performing Commodity ETFs Over The Last Three Years]. [...]
[...] natural gas is arguably one of the most frustrating commodities on the market, trading the fossil fuel has surged in popularity in recent years. Natural [...]
[...] natural gas is arguably one of the most frustrating commodities on the market, trading the fossil fuel has surged in popularity in recent years. Natural gas’s [...]
[...] is no secret that natural gas suffered a crushing blow after 2008, forcing major products like theRead More… Categories: [...]
[...] natural gas is arguably one of the mostfrustrating commodities on the market, trading the fossil fuel has surged in popularity in recent years. Natural gas’s [...]
[...] is no secret that natural gas suffered a crushing blow after 2008, forcing major products like the United States Natural Gas Fund, LP (NYSEARCA:UNG) to [...]
[...] Lead has appeal as an investable asset for several reasons. Because demand is related to the health of the construction and automotive industries, the metal can act as a leveraged play on the overall global economy. Moreover, lead can provide an effective inflation hedge in certain environments. There are a number of different ways to gain exposure to lead, including exchange-traded products and futures contracts [see also Three Worst Performing Commodity ETFs Over The Last Three Years]. [...]
[...] losing 98% since inception and enduring multiple reverse splits just to stay open, the fund finally caught some traction this [...]
[...] being declared one of the worst investments of the last few years, natural gas seemed to finally find its footing in 2012. The fossil fuel [...]
[...] being declared one of the worst investments of the last few years, natural gas seemed to finally find its footing in 2012. The fossil fuel [...]
[...] being declared one of the worst investments of the last few years, natural gas seemed to finally find its footing in 2012. The fossil fuel [...]
[...] In 2011, REMX never matched the performance of its underlying commodities– much like other miners– and it ended the year by posting a total loss of about 34%. Investors should also note that the fund is relatively volatile and has a beta of 2.37. Despite some of its shortcomings, the fund could be a decent long term play for investors who are bullish on rare earths but are looking to take a basket approach when it comes to investing in this increasingly important sector [read Three Worst Performing Commodity ETFs Over The Last Three Years]. [...]
[...] of 3,150 billion cubic meters of natural gas. While STO has regained some of its losses from its steep tumble in 2008, the stock is down nearly 6% of the trailing one year period. STO’s dividend yield of 3.7% may, [...]
[...] losing 98% since inception and enduring multiple reverse splits just to stay open, the fund finally caught some traction this [...]
[...] natural gas has been on the losing end of markets the past few years, as it has been one of the worst-performing assets since the recession began. Many had hoped that the cooldown in the United States at the end of [...]
[...] natural gas has been on the losing end of markets the past few years, as it has been one of the worst-performing assets since the recession began. Many had hoped that the cooldown in the United States at the end of [...]
[...] run higher, but those who did had their expectations tempered, as the commodity has been among the worst performing over the last two weeks. Natural gas prices have dropped more than 9% since the end of May, as a [...]
[...] run higher, but those who did had their expectations tempered, as the commodity has been among the worst performing over the last two weeks. Natural gas prices have dropped more than 9% since the end of May, as a [...]