With nine months of 2014 in the proverbial books, investors that actively follow exchange traded funds know at least one thing: This has been a particularly rough year for commodities funds, both in terms of performance (or lack thereof) and outflows.
There have, however, been some bright spots. The iPath Dow Jones-UBS Coffee Total Return Sub-Index ETN (NYSEArca: JO) and the iPath Pure Beta Coffee ETN (NYSEArca: CAFÉ) are two of the year’s top-performing non-leveraged exchange traded products of any stripe. The Teucrium Corn Fund (NYSEArca: CORN and the Teucrium Wheat Fund (NYSEArca: WEAT) have defied weakness in those commodities to add assets at an impressive rate even as investors scamper out of scores of other commodity funds. [These ETFs are Bucking Commodities Outflows]
Another commodities ETF that has proven somewhat sturdy is the First Trust Global Tactical Commodity Strategy Fund (NasdaqGM: FTGC). Just three weeks shy of its first anniversary, FTGC is already a $183.1 million ETF. That size is “a minor miracle for a commodity ETF. Collecting money in bad times is a good sign for up-and-coming ETF,” reports Eric Balchunas for Bloomberg.
FTGC lost $7.5 million in assets last month, a mere sliver of the $1.05 billion that departed U.S.-listed commodities ETFs and ETNs.
The First Trust offering is also proving that active management can work with commodities ETFs. Since debuting late October 2013, FTGC is down just 1.7% while the GreenHaven Continuous Commodity Index Fund (NYSEArca: GCC) is lower by nearly 7%.
“While many traditional commodity ETFs weight commodities based on the liquidity of their markets or their level of production, FTGC favors less volatile commodities that don’t move in close lockstep with other commodities. Its active management allows it to avoid some of the costs of rolling over futures contracts that other ETFs can’t avoid,” notes Balchunas.
FTGC’s largest holdings currently include an almost 13% weight to beaten up silver futures, a 9.3% allocation to Brent crude futures and an 8.8% weight to high-flying coffee futures. The ETF also features multiple exposures to the same commodities including positions in two copper futures contracts and two corn futures contracts. FTGC currently has no exposure to gold. [Silver ETFs for the Daring]
First Trust Global Tactical Commodity Strategy Fund
ETF Trends editorial team contributed to this post.