Commodities have been down in the dumps this year as a strengthening U.S. dollar and slowing global economy weigh on demand. Consequently, exchange traded products linked to the raw materials have been among the worst performers of 2015.
For instance, a natural gas-related exchange traded note and exchange traded fund are at the bottom of the barrel this year. Year-to-date, the iPath Bloomberg Natural Gas Subindex Total Return ETN (NYSEArca: GAZ) plunged 60.7% and First Trust ISE-Revere Natural Gas Index Fund (NYSEArca: FCG) plummeted 59.9%. Natgas prices have been weakening, with gas futures recently touching a 16-year low, as a booming shale oil industry inundated the markets with rising supplies while an unusually warm winter diminished heating demand. However, colder temperatures ahead have bolstered natural gas prices over the past week.. GAZ tries to reflect the performance of natural gas futures. FCG tracks natural gas-related companies. [Natural Gas ETFs Blaze Ahead]
The ongoing global crude oil supply glut has dragged on energy-related sectors, including master limited partnerships that provide the basic infrastructure to transport oil around the U.S. For instance, the Yorkville High Income MLP ETF (NYSEArca: YMLP) decreased 58.2% year-to-date. Nevertheless, YMLP’s robust 21.29% 12-month yield may help offset some of the pullback. Additionally, among the worst ETP performers this year, the iPath S&P GSCI Crude Oil Total Return Index ETN (NYSEArca: OIL), which tracks West Texas Intermediate crude oil moves, also retreated 49.4% this year. [Hunting ETFs for More Income]
The First Trust Indxx Global Agriculture ETF (NasdaqGM: FTAG), which declined 56.2% this year, was also caught up in the weakness in agricultural commodities. FTAG tracks companies that are engaged in improving agricultural yields, and with depressed soft commodity prices, farmers are not willing to spend as much on improving yields.
With the global push toward cleaning up the environment, especially after the Paris U.N. Climate Change accord, the Market Vectors-Coal ETF (NYSEArca: KOL) has had a rough year, falling 54.9%. KOL follows the Market Vectors Global Coal Index, which includes global companies involved in coal operations, transportation of coal and the storage and trade of coal. [Coal ETF’s Descent Continues]
Along the same vein as the coal miners space, the broader SPDR Metals & Mining ETF (NYSEArca: XME) dropped 49.8% year-to-date. XME, which tracks a group of precious and industrial metals producers, has been under pressure as precious metals weakened ahead of the Federal Reserve tightening and global economies, notably China, slowed down. The Chinese slowdown may also explain the pullback in many base metals and related ETPs, including the iPath Bloomberg Nickel Subindex Total Return ETN (NYSEArca: JJN), which was down 48.5% this year.
For more information on ETFs, visit our ETF performance category.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, 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.