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Grains Leading Commodity ETFs in 2012 on Drought


We scanned the ETP universe for the best performing “Commodity” based products in 2012, and “Grains” came back at the top of the list.

Primarily, iPath DJ-UBS Grains Total Return ETN (JJG) leads the way, up 27.58% year to date. Related ETN, iPath Pure Beta Grains (WEET) is next in line, having rallied 27.21% and Elements MLCX Grains Index Total Return (GRU) has risen 23.68%.

WEET is the newest product in this category on the market, having launched in April of 2011 and the “grains” that are being referred to in its name include Wheat, Kansas Wheat, Corn, Soybeans, Soybean Meal, and Soybean Oil, owning futures contracts in each one.

JJG and GRU simply own three futures contracts, in Wheat, Corn, and Soybeans accordingly, thus giving less diversification and being more concentrated in the three grains mentioned. It is not particularly surprising to see these YTD performance results relating to grains when we simply rewind the clock in 2012 and look at the summer that we had which was mostly fraught with severe drought, especially in the east and throughout the mid-western U.S.

Although trading volumes tend to be hit or miss relating to Grains based ETNs simply due to the fact that not every investment portfolio manager that uses ETPs sees the merit in commodity exposure and/or do not “need” commodity exposure for various reasons and instead likely focus on equities/fixed income, these ETNs can be traded effectively given the utilization of the proper trading techniques and perhaps the assistance of professional trading desks when necessary.

Thus, if one pages through monthly charts for any of these products, particularly JJG which is the largest in the segment in terms of assets under management (JJG has $118 million in AUM versus $23 million for GRU and $2.7 million for WEET), one will see that there are surges in volume that have occurred this year, particularly during this year’s drought.

iPath DJ-UBS Grains Total Return ETN

For more information on Street One ETF research and ETF trade execution/liquidity services, contact Paul Weisbruch at pweisbruch@streetonefinancial.com.