By Jared Cummans
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.
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 - News): 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.
- VelocityShares 3x Long Natural Gas ETN (UGAZ - News)/VelocityShares 3x Inverse Natural Gas ETN (DGAZ - News): 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.
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 - News): 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.
- Teucrium Agricultural Fund (TAGS - News): 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.
- VelocityShares 2x Long Copper ETN (LCPRF - News)/VelocityShares 2x Inverse Copper ETN (SCPR - News): 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.
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 - News): 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.
- MSCI Global Agriculture Producers Fund (VEGI - News): 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 - News): 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, which have a combined $11.6 billion in assets.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.