With the drubbing the commodities complex has taken this year, finding a multiple commodities exchange traded products with which to build a “best of” list would appear to be a daunting task.
The major physically backed gold and silver ETFs are down 27.4% and 35%, respectively, and two gold funds are among the 10 worst in terms of 2013 outflows. On Thursday, gold tested its second-quarter lows and despite an improving global economy, the industrial demand thesis has not worked in silver’s favor this year. [Trying to Find a Bottom for Gold]
Despite the pounding endured by the precious metals, this year has not been a disaster for all commodities ETFs. Some of have delivered pleasant upside surprises and, yes, some have even generated double-digit returns.
What follows is the list of 2013’s commodity ETFs and ETNs. Please be advised that none of these products are equity-based.
iPath Dow Jones-UBS Cocoa Total Return Sub-Index ETN (NYSEArca: NIB)
2013 Gain: 21.6%
Comment: The current cocoa deficit is the commodity’s largest in 50 years and the supply deficit is expected to last through 2018. Traders anticipate cocoa prices could rise an average 15% to $3,200 a ton by the end of 2014. ICE cocoa futures currently trade around $2,771 per ton, rising 24% this year, the second best performer among the 24 commodities tracked by the Standard & Poor’s GSCI gauge. [Largest Cocoa Deficit in 50 Years Strengthens Chocolate ETNs]
iPath Pure Beta Cocoa ETN (NYSEArca: CHOC)
2013 Gain: 21.5%
Comment: CHOC’s underlying index “reflects the returns that are potentially available through an unleveraged investment in the futures contracts in the Cocoa markets. The Index may roll into one of a number of futures contracts with varying expiration dates, as selected using the Barclays Pure Beta Series 2 Methodology,” according to Barlcays.
U.S. Natural Gas Fund (NYSEArca: UNG)
2013 Gain: 10.6%
Comment: Since UNG debuted six and a half years ago, the fund has undergone reverse splits and a 95% loss. UNG has been far more kind to investors this year and in recent weeks. Supply is likely to continue working against natural gas in the coming years, but demand and seasonal factors could provide some help. That has been the recent scenario as UNG has surged 23% in just the past month.
iPath Pure Beta Crude Oil ETN (NYSEArca: OLEM)
2013 Gain: 7.1%
Comment: OLEM’s index can hold various West Texas Intermediate futures contracts with different expiration dates. Although not jaw-dropping, OLEM’s performance this year has been solid considering increased oil output coupled with slack deman.
U.S. 12 Month Natural Gas Fund (NYSEArca: UNL)
2013 Gain: 9%
Comment: UNL is the less volatile version of UNG because the former holds a basket for New York-traded natural gas futures contract while the latter is focused on the more heavily traded front-month contract. UNL was trading under $16 in early November, but closed just below $19 on Thursday.
iPath Pure Beta Cotton ETN (NYSEArca: CTNN)
2013 Gain: 7%
Comment: There are multiple cotton ETNs on the market and while CTNN’s performance has been solid, particularly among soft commodities, the ETN is thinly traded. As of this writing, the last time CTNN traded was Dec. 13.
U.S. 12 Month Oil Fund (NYSEArca: USL)
2013 Gain: 7%
Comment: USL is to the U.S. Oil Fund (NYSEArca: USO) what UNL is to UNG. The exception here is that USL has outpaced USO this year. USL trades almost 6% below its 52-wek high, but s up 2% in the past month.
iPPath Dow Jones-UBS Cotton Total Return Sub-Index ETN (NYSEArca: BAL)
2013 Gain: 6.1%
Comment: BAL is the more heavily traded cotton ETN. That is to say it does transact every day. The ETN actually merits consideration right now because of an improving technical condition and favorable seasonality. December kicks-off a strong multi-month seasonal run for cotton futures. [Three C’s of Commodities Enter Seasonal Sweet Spot]
U.S. Brent Oil Fund (NYSEArca: BNO)
2013 Gain: 6.1%
Comment: Brent futures have outpaced West Texas Intermediate this due to several factors including lost production in Libya, stalled IIran nuclear talks, violence in Syria and Egypt and violence at oil assets in Nigeria. In November, the Brent/WTI spread widened to an eight-month high. With the U.S. racing to the top of the global oil production latter and output faltering in countries that benchmark to Brent futures, BNO could be the better medium-term oil futures play.