Commodity ETFs Vs Futures: Different Exposure, Different Price

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Long Only Commodities as an asset class has been plummeting since around April last year, and the downtrend continues into 2015. The average move of commodity futures in January came out to be -5.02%, compared to ETFs -7.54%, with ETFs underperforming the futures markets they supposedly track by 2.52% {Past performance is not necessarily indicative of future results}.

Here’s our monthly look at:

1. How the numerous commodity ETFs which have sprung onto the scene the past few years are tracking a simple strategy of just buying the December futures market of that commodity, under the theory that the ETF will have to roll their positions periodically throughout the year, and in doing so take on costs the simple strategy does not have.

2. How the passive investment strategy of being long commodities (either via futures or ETFs) compare to an active strategy going both long and short commodity markets via a professional commodity trading advisor (as tracked by the BarclayHedge Ag Trader Index).

(Data as of January 30th, 2015)

Commodity ETF Over/Under Performance 2015

Commodity Futures ETF Difference
Crude Oil $CL_F
Brent Oil $NBZ_F
Natural Gas $NG_F
-0.82% font>
Cocoa $CC_F
-2.43% font>
Coffee $KC_F
-0.80% font>
Corn $ZC_F
-1.42% font>
Cotton $CT_F
Live Cattle $LE_F
-3.88% font>
Lean Hogs $LH_F
-9.39% font>
Sugar $SB_F
Soybeans $ZS_F
-0.21% font>
Wheat $ZW_F
-0.62% font>
Average strong> -5.02% strong> -7.54% strong> -2.52% strong> font>
Commodity Index $DBC -5.69% font>
Long/Short Ag Trader CTAs 0.61%

(Disclaimer: Past performance is not necessarily indicative of future results)
(Disclaimer: Sugar uses the October contract, Soybeans the November contract.)
Long/Short Ag Trader CTA = Barclayhedge Ag Traders Index


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