Weakness in gold, oil and other commodities has pushed natural resources ETFs such as PowerShares DB Commodity Index Tracking Fund (NYSEArca: DBC) into the red this year. Commodity ETFs could see more pain if the decade-long rally or “supercycle” is over as China’s economic growth slows.

Ruchir Sharma, head of emerging markets and global macro at Morgan Stanley Investment Management, in a Bloomberg commentary says the pullback in commodity prices the past few months is actually good news for the global economy.

“The China-commodity connection is breaking. After three straight decades of ultrafast growth, China’s inevitable slowdown has let air out of the bubble: Since the peak in April 2011, the broadest available measure of commodity prices has fallen 16%,” Sharma wrote. “In recent months, money has started flowing out of exchange-traded funds for most commodities.”

DBC was little-changed on Monday in above-average trading volume. The commodity ETF invests in a basket of futures contracts, including oil, gold, natural gas, silver and wheat.

The fund is down about 5% year to date.

“Broad-basket commodity products will likely interest two kinds of investors: those who believe global demand for commodities will grow in coming years, and those seeking diversification and an inflation hedge,” says Morningstar analyst Abby Woodham in a profile of DBC. “In the past, commodities had low correlations to stocks, but correlations have risen significantly since the 2008 financial crisis.”

PowerShares DB Commodity Index Tracking Fund

The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.