Most of the commodities have performed terribly this year; but
some of them have been showing strength of late on recovering
macro fundamentals, improving global trends, a weak U.S. dollar
and supply/demand imbalances.
Political uncertainty in the U.S. has been temporarily averted,
China is picking up slowly and Europe is seeing positive
Play a Resurgent Europe with These ETFs
). Further, tight supply conditions and recovering global demand
coupled with 'no taper' by the Fed last month boosted prices for
most of the products, in particular softs and industrial
Below, we have highlighted some of the top performing ETFs from
these two corners of the commodity market that have delivered
handsome returns over the trailing one-month period. Any of these
could be excellent plays for investors seeking to ride out the
sudden move in the softs and industrial metals space.
Dow Jones-UBS Sugar Subindex Total Return ETN (
Sugar has been the top performer in the broad commodity space
over the past month. The recent surge can be traced to the supply
disruption in the world's largest sugar-exporting terminal,
Copersucar, caused by fire. In addition, poor weather conditions
in Brazil, the largest sugar producer in the world, are posing
threats to sugar harvest.
However, global supply glut and increased production from India,
the second biggest producer of the crop on earth, could keep
prices at check (read:
Sugar ETFs: More Weakness Ahead?
One product that has largely benefited from the recent trend is
SGG. The ETN tracks the Dow Jones-UBS Sugar Subindex Total
Return, which delivers returns through an unleveraged investment
in the futures contracts on sugar. The index currently consists
of one futures contract on the commodity of sugar.
The note has expense ratio of 0.75% and has amassed $33.8 million
in its asset base. Volume is light, suggesting additional cost in
the form of a wide bid/ask spread. Though the ETN gained nearly
10% in the past one month, the long-term outlook does not look
bright as the product has a Zacks Rank of 5 or' Strong Sell'
iPath Dow Jones-UBS Cocoa Subindex Total Return ETN (
Cocoa price has been on the rise on growing chocolate demand and
bad weather conditions in the two major producing nations of West
Africa. This trend is expected to continue in the coming months
thanks to the upcoming holiday season that would continue to fuel
demand for chocolate.
Further, the global cocoa market would be in production deficit
for the next four consecutive years, according to the
International Cocoa Organization (read: (read:
2 Commodity ETFs Offering Investors Sweet
Investors seeking to play this rally in cocoa prices could find
NIB an intriguing option. This ETN tracks the Dow Jones-UBS Cocoa
Subindex Total Return. The index delivers returns through an
unleveraged investment in the futures contracts on cocoa and
currently consists of one futures contract on the commodity
all the agricultural ETFs here
The product charges 75 bps in fees per year and trades in small
volume of nearly 36,000 shares on average daily basis. This
increases the trading cost in the form of a wide bid/ask spread.
The fund is also unpopular and has attracted just $45.4 million
in assets this year. The note added nearly 6.5% in the trailing
one month and currently has a Zacks Rank of 3 or 'Hold' rating.
iPath DJ-UBS Nickel Total Return Sub-Index ETN (
Nickel prices are made an impressive comeback of late, as the
excessive oversupply situation is reversing and the demand from
alloy industries is rising.
Indonesia, the largest exporter of nickel ore in the world, is
seeking to prohibit ore exports at the beginning of the New Year.
This move would come as a big boon to nickel and drive prices
much higher next year.
A good way to play this trend is with JJN. The note provides
exposure through an unleveraged investment in the futures
contracts on nickel. It tracks the Dow Jones-UBS Nickel Subindex
Total Return, which consists of one futures contract on the
commodity. The product has managed assets worth $4.9 million and
trades in paltry volume, which increases the total cost of
trading beyond the expense ratio of 0.75%.
JJN added over 6% over the trailing one month. The product has a
Zacks Rank of 1 or 'Strong Buy' rating, suggesting that it could
outperform in the broad commodity world over the next one-year
period (read: all the
The recent trends have been encouraging for the trio that clearly
outpaced the broad commodity fund PowerShares DB Commodity Index
Tracking Fund (
) by wide margins. Investors could definitely focus on these ETFs
for a positive play on commodities that are currently enjoying
the run-up in their prices in the recent weeks.
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IPATH-DJ-A NCKL (JJN): ETF Research Reports
IPATH-DJ-A COCO (NIB): ETF Research Reports
IPATH-DJ-A SUGR (SGG): ETF Research Reports
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