ETFS All Commodities

Mixed performance continues

The year got off to a good start for the majority of commodities but unleaded gasoline and soybeans were the stars of the show posting 16.18% and 12.24% rises respectively over the first quarter.

Unlike last year, gold failed to outshine its commodity peers and despite a strong start to 2012, in the year to 13 April the ETF was down 3%, at a time when the FTSE World index which gained 6.2%.

Some 12 out of the 20 commodity futures held within the ETF posted a positive performance in the first quarter, compared to just five positive performers in the whole of 2011.

Natural Gas hit hard

Topping the list of fallers was once again natural gas which fell 38.67% in the first quarter. The commodity sits in the energy sector which is the second biggest sector in the ETF at 30.20%.

Agriculture is the largest sector making up 31.54% of the ETF, and has been a mixed bag of some of the best (Soybean) and worst (Coffee) performers in the ETF so far this year.

Livestock is the smallest sector of the ETF with both components performing poorly Live Cattle (-8.2%) and Lean Hogs (-7.12%).

Be mindful that this ETF tracks the futures of commodities, not the physical commodity itself. This can result in movements of the futures contracts not reflecting the performance of the individual commodities themselves. However, we have found that because of the number of commodities in the ETF these movements are generally neutralised and overtime tend to revert to the mean.

Over five years the ETF has returned 2.1% to investors, compared to an 6.6% gain in the value of the Dow Jones UBS Commodity index.

Source:- http://commodityhq.com

Citywire Selection Verdict: Last year was a mixed one for the broad commodity index and 2012 has started in similar fashion.While precious metals and oil related commodities saw positive gains almost universally, industrial metals and agricultural commodities retrenched and predicting the direction of commodities in the current climate is a challenge, with any pick up in global activity almost certainly translating into a rise. However commodities have been on a great long term run and the risk is they have got ahead of themselves.