Its been more than four years since financial markets took their unprecedented nose dive, and yet some investors still cringe at the mere mention of the year that most wish they could forget. The crash of 2008 shook markets around globe, hammering down prices in nearly every corner of the investable universe. On March 9th 2009, investors were finally able to see the light at the end of the tunnel as rock-bottom markets prepared to make their turnaround. The pickup spurred investors’ appetites for riskier asset classes, luring many to the lucrative world of commodity investing. For the most part, commodities can find a place in almost everyone’s portfolio; the asset class can provide uncorrelated returns and diversification benefits, as well as serve as a potential hedge against inflationary pressures [see also 12 High-Yielding Commodities For 2012].
Thanks to the tremendous growth of the ETF industry, the average investor can now easily tap into an asset class that had previously been virtually unreachable. There are currently over a 100 commodity ETPs for investors to choose from, some of which have posted spectacular gains since their inception. In particular, single commodity ETPs have proven to be a bright spot in the commodities space, outshining some of the more popular broad-based products. Below we highlight 5 of the best performing commodity ETPs over the last three years [see also Three Reasons Why Gold Is Overvalued]:
United States Gasoline Fund LP (UGA): Up 149.11%
UGA invests in one of the most widely-known and used commodities worldwide: gasoline. As gasoline prices have skyrocketed over the last three years, investors in UGA perhaps aren’t so irritated every time they are at the pump since this fund has gained more than 149% over the last three years. UGA’s portfolio primarily consists of RBOB gasoline futures traded on the NYMEX. RBOB stands for “Reformulated Blendstock for Oxygenate Blending”, the raw ingredient used to make different blends of gas, and as such prices on RBOB futures roughly line up with what drivers see at their local gas stations [see also Brent Crude vs. WTI: The Best Performing Commodity].
E-TRACS UBS Bloomberg CMCI Silver ETN (USV): Up 140.69%
Although most people would consider gold the king of the precious metals category, silver has been getting a lot of attention from investors as it has outperformed gold by a huge margin over the last few years. As the markets continue to experience volatility, investors have rushed to this shiny metal to help protect their portfolios from weakness in both bonds and equities. Unlike gold, silver is used in a wide array of industrial applications, meaning the demand for the product will remain relatively high. The futures based USV along with DBS and SLV have all had strong performances, with USV at the top of the list with its gain of more than 140% over the last three years [see also 25 Ways To Invest In Silver].
Dow Jones-UBS Tin Total Return Sub-Index ETN (JJT): Up 118.15%
This ETN offers pure play exposure to tin, another highly versatile metal that is used in a number of industrial applications. Nearly half of the tin produced in the world is used in soldering, while the remainder is divided among tinplates, chemicals, brass/bronze, among other products. As many emerging market countries continue to grow and expand their infrastructure, the demand for this industrial metal has skyrocketed. Over the last three years, Barclays iPath’s JJT has had a stellar performance, gaining more than 118%.
Dow Jones-UBS Cotton Total Return Sub-Index ETN (BAL): Up 117.57%
BAL is one of only two products in the ETP industry that offers investors a pure play approach to cotton, a crucial commodity for textiles around the world. Cotton prices have hit record-breaking highs throughout the last couple years as strong demand from China, India, and other emerging markets have pushed the soft commodity skyward. Since inception, BAL has accumulated more than $40 million in assets and currently maintains a three-year return of over 117% [see also 50 Ways To Invest In Agriculture].
Dow Jones-UBS Copper Total Return Sub-Index ETN (JJC): Up 110.88%
JJC invests in one of the most abundant metals in the world: copper, a commodity that is estimated to have millions of years worth of supplies trapped inside the earth’s crust. Copper is widely used in a number of applications, from wiring systems and circuit boards, in roofing and plumbing products, and in high tech industrial machinery. Generally, copper futures prices reflect the residential and commercial housing industry as well as the overall condition of the economy. The continuing recovery of the housing market combined with China’s skyrocketing demand for raw materials has pushed JJC’s 3-year return to just under 111% [see also 13 Ways To Invest In Copper].
Disclosure: No positions at time of writing.
[...] After last week’s bullish run, investors are anxiously waiting to see if we are due for a pullback, or if the bull train will continue at full speed. This week will be relatively quiet, although U.S. markets will likely be very active today as Ben Bernanke is set to testify before congress. Bernanke’s commentary, or lack thereof, on a third quantitative easing program will surely be a big market mover at home. Overseas, there will be other things to focus on, like major economic reports that shed light on how particular areas of the world have been performing [see also 5 Best Performing Commodity ETFs Over The Last 3 Years]. [...]
[...] After last week’s bullish run, investors are anxiously waiting to see if we are due for a pullback, or if the bull train will continue at full speed. This week will be relatively quiet, although U.S. markets will likely be very active today as Ben Bernanke is set to testify before congress. Bernanke’s commentary, or lack thereof, on a third quantitative easing program will surely be a big market mover at home. Overseas, there will be other things to focus on, like major economic reports that shed light on how particular areas of the world have been performing [see also 5 Best Performing Commodity ETFs Over The Last 3 Years]. [...]
[...] For sugar, the most direct method of obtaining exposure comes from No. 11 Sugar futures contracts offered on the NYMEX. Investors can also utilize ETFs, as the Dow Jones-UBS Sugar Subindex Total Return ETN (SGG) offers exposure to front month futures contracts without the hassle of owning and maintaining a futures account. For silver, futures on the COMEX offer a direct means of exposure, though futures can be risky and difficult to trade. Perhaps the most liquid option out there comes from the iShares Silver Trust (SLV) which measures physical bullion. The fund makes for a perfect trading option, as it has an ADV topping 25 million shares; however, given its physical nature, it can also be an integral part of a longer-term portfolio [see also 5 Best Performing Commodity ETFs Over The Last 3 Years]. [...]
[...] Comparing ETFs can be somewhat of a daunting task considering the vast array of products investors have to chose from. But for some, comparing the best and worst of the ETF universe on a number of simple factors can be the quickest way to either narrow down the space or find the outperformers and the biggest losers. The ETF Best & Worst page allows you to compare the top 100 and lowest 100 ETFs by expense ratio, dividend yields and P/E ratios, as well as YTD, 52 week, weekly and monthly returns (DOIL has the best return over the past month) [see also 5 Best Performing Commodity ETFs Over The Last 3 Years]. [...]
[...] As an up-and-down (and up again) first half of the year draws to a close, many portfolios have managed to squeeze out moderate gains so far in 2012. Looking around at the various exchange-traded products reveals some interesting results after what can only be described as an exciting six month stretch. While many ETFs have performed as one might expect, given the macroeconomic environment, there are a number of surprises as well [see also 5 Best Performing Commodity ETFs Over The Last 3 Years]. [...]
[...] total assets, DGP is the largest gold leveraged commodity ETF out there, and currently one of the best performers with a YTD of 26%. This ETF has out performed the S&P 500 every year since its inception in [...]
[...] Commodity investing falls beyond the radar of many investors for a multitude of reasons. These assets can be extremely volatile and require constant supervision and for those who are unwilling to do that, you can be almost certain that your position will turn sour at some point. While the rapid spread of commodity ETPs has been a crucial movement for offering commodity investing to the masses, it also gives some investors a false sense of security; while many know futures contracts to be dangerous and volatile, they do not think the same thing of a fund that tracks said contracts [see also 5 Best Performing Commodity ETFs Over The Last 3 Years]. [...]