This has been a bad year for commodities-related exchange traded funds, with hard assets heading for their first annual lose since 2008, and it could get worse if historical December trends pan out.
Since 1971, the Standard & Poor’s GSCI Spot Index of 24 raw materials has declined in December about 83% of time when the benchmark showed a loss for the year through November, reports Elizabeth Campbell for Bloomberg.
On average, the December decline was 3.9%. The S&P GSCI Index is down 3.7% year-to-date.
Commodities have declined in December 55% of the time since 1971, with average returns of 0.1%. In the years the GSCI showed negative returns over the first 11 months, December losses were magnified.
“It’s likely that the trend will hold through the end of the year,” Michael Cuggino, a manager at Permanent Portfolio Family of Funds Inc., said in the article. “Investors see anemic or slowing economic growth in the world’s mature and emerging-market economies, while there’s more supply on hand. That translates to lower prices.”