Close Menu
Fund Focus News
    Facebook X (Twitter) Instagram
    Trending
    • Mutual Fund Calculator: How Delaying Your SIP By 5 Years Can Shrink Your Retirement Corpus By Nearly Rs 2 Cr?
    • Where to invest Rs 1 lakh right now – gold, silver, stocks, mutual funds? 7 wealth and fund managers decode the correct mix
    • EFG Hermes rolls out five mutual funds on ONE App for retail investors
    • What Savvy Investors Need to Know About Trading ETFs
    • Business News Today: Stock and Share Market News, Economy and Finance News, Sensex, Nifty, Global Market, NSE, BSE Live IPO News
    • How Rs 1,000 monthly SIP at 25 can generate Rs 20,000 income after 50 — SIP + SWP strategy explained – Money News
    • Premium Bonds ‘not even close’ warning as NS&I announces major change
    • Franklin Templeton India MF data show passive funds AUM up 38% YoY in January
    Facebook X (Twitter) Instagram
    Fund Focus News
    • Home
    • Bonds
    • ETFs
    • Funds
    • Investments
    • Mutual Funds
    • Property Investments
    • SIP
    Fund Focus News
    Home»ETFs»Commodity ETFs are down this quarter. That could be long-term positive
    ETFs

    Commodity ETFs are down this quarter. That could be long-term positive

    August 24, 2024


    It’s been a rocky summer to be a commodities trader, but that could give investors looking to diversify away from stocks and bonds some long-term upside. More than halfway through the third quarter, many of the biggest commodity ETFs in the United States are in sizable holes. That applies to index-style funds like Invesco’s Optimum Yield Diversified Commodity Strategy ETF (PDBC) as well as funds focused on single commodities, like the United States Oil Fund (USO) . The slump in commodities could be a warning sign about slower economic growth . Notably, one of the exceptions among commodities has been gold , which is trading near record highs. The yellow metal is often seen as a defensive trade. Additionally, the drawdown has come as the U.S. dollar, measured by the DXY index, is weakening — another hint that that global demand may be weak. “The DXY index is down nearly -3% month to date and in our view, this is a harbinger for weak supply/demand fundamentals across the broader commodity complex,” Ryan Grabinski of Strategas said in an Aug. 22 note to clients. However, signs of a big slowdown in demand for all commodities aren’t evident just yet. Kathy Kriskey, senior commodities ETF strategist at Invesco, said that oil supply is actually tight at the moment. The commodities slump could be partially due to mechanical factors in the market, such as low trading volumes combined with large commodity trading advisors betting against the sector, Kriskey said. “I know it sounds like a bit of a lame excuse for why this quarter so far has been challenging, but I do think a lot of is on very small news items — the positioning is very short. I think it will improve,” she added. Corn and wheat Agricultural commodities are one area where a story of slowing demand doesn’t appear to be the cause of the decline. Sal Gilbertie, CEO of ag-focused investment firm Teucrium, said the price of agricultural products is just now shaking off the disruption from Russia’s invasion of Ukraine more than two years ago. “The price of corn has taken almost three full years from those 2022 spike highs to get back down. We’re finally back at the cost of production,” said Sal Gilbertie. Corn typically leads the price of wheat and soybeans lower, he added. Teucrium’s ETFs tracking those three commodities have fallen in the third quarter. CORN 5Y mountain The Teucrium Corn ETF is now trading below its level from before Russia’s invasion of Ukraine in 2022. The cost of production is a key level for agricultural products because farmers are subsidized, Gilbertie says. Once a price hits that level, the upside should outweigh the downside in the future for prices of corn and related ag products, but it is not clear when the next move will come. “When you see corn between $3.50 and $4 [a bushel], it just trades sideways until something happens,” Gilbertie said. What’s next The slump in commodities comes at a time when global central banks are starting to pivot toward looser monetary policy. Data from Invesco shows that commodity indexes have rallied after the start of some rate cutting cycles in the past — particularly in the mid-1990s. If easier interest rates flow through the economy, that can stir demand from consumers and companies, which in turn can drive the price of oil and copper higher. Commodities rallied on Friday after Fed Chair Jerome Powell said “the time has come for policy to adjust .” “When we are in an easing cycle, commodities tend to do well,” Kriskey said. To be sure, Fed rate cuts don’t always fix weak demand. Goldman Sachs economists still predict a 20% chance the U.S. economy falls into a recession in the next 12 months. And oil, one of the biggest weights in commodity indexes, could see stepped up supply in coming months. “Crude oil markets remain in deficit, but are likely as tight as they will be for some time. By 4Q, the balance will likely return to equilibrium, and we estimate a surplus in 2025,” Morgan Stanley commodities strategist Matijn Rats said in an Aug. 22 note to clients. Rats also lowered his global demand forecast for oil, citing economic issues in China. Put it all together, and investors may need to be willing to wait for a commodities rebound. That could make long-term plays like metals related to batteries and the electric grid a smart allocation. One way to play that theme could be Invesco DB Base Metals Fund (DBB) , which holds futures on copper, zinc and aluminum in roughly equal value. Note, however, that the Invesco fund issues K-1 tax form due to its partnership structure, which can be complicated. “I like the industrial metals at these levels, but I think it’s a long-term hold, because of the energy transition,” said Kriskey. — CNBC’s Michael Bloom contributed reporting.



    Source link

    Share. Facebook Twitter Pinterest LinkedIn Tumblr Telegram Email

    Related Posts

    What Savvy Investors Need to Know About Trading ETFs

    February 25, 2026

    Business News Today: Stock and Share Market News, Economy and Finance News, Sensex, Nifty, Global Market, NSE, BSE Live IPO News

    February 25, 2026

    Tradr Launches 2X Single-Stock ETFs On CleanSpark, Centrus, Coherent – Cleanspark (NASDAQ:CLSK)

    February 24, 2026
    Leave A Reply Cancel Reply

    Top Posts

    The Shifting Landscape of Art Investment and the Rise of Accessibility: The London Art Exchange

    September 11, 2023

    Charlie Cobham: The Art Broker Extraordinaire Maximizing Returns for High Net Worth Clients

    February 12, 2024

    The Unyielding Resilience of the Art Market: A Historical and Contemporary Perspective

    November 19, 2023

    Mutual Fund Calculator: How Delaying Your SIP By 5 Years Can Shrink Your Retirement Corpus By Nearly Rs 2 Cr?

    February 26, 2026
    Don't Miss
    Mutual Funds

    Mutual Fund Calculator: How Delaying Your SIP By 5 Years Can Shrink Your Retirement Corpus By Nearly Rs 2 Cr?

    February 26, 2026

    Mutual Fund Calculator: How Delaying Your SIP By 5 Years Can Shrink Your Retirement Corpus…

    Where to invest Rs 1 lakh right now – gold, silver, stocks, mutual funds? 7 wealth and fund managers decode the correct mix

    February 25, 2026

    EFG Hermes rolls out five mutual funds on ONE App for retail investors

    February 25, 2026

    What Savvy Investors Need to Know About Trading ETFs

    February 25, 2026
    Stay In Touch
    • Facebook
    • Twitter
    • Pinterest
    • Instagram
    • YouTube
    • Vimeo
    EDITOR'S PICK

    High-level talks build bonds – Chinadaily.com.cn

    October 31, 2025

    6 Important Factors to Consider Before Buying

    October 6, 2024

    Indian Bond Yields Climb As US Influences And Debt Supply Weigh In

    October 18, 2024
    Our Picks

    Mutual Fund Calculator: How Delaying Your SIP By 5 Years Can Shrink Your Retirement Corpus By Nearly Rs 2 Cr?

    February 26, 2026

    Where to invest Rs 1 lakh right now – gold, silver, stocks, mutual funds? 7 wealth and fund managers decode the correct mix

    February 25, 2026

    EFG Hermes rolls out five mutual funds on ONE App for retail investors

    February 25, 2026
    Most Popular

    🔥Juve target Chukwuemeka, Inter raise funds, Elmas bid in play 🤑

    August 20, 2025

    💵 Libra responds after Flamengo takes legal action and ‘freezes’ funds

    September 26, 2025

    ₹10,000 monthly SIP in this mutual fund has grown to ₹1.52 crore in 22 years

    September 17, 2025
    © 2026 Fund Focus News
    • Get In Touch
    • Privacy Policy
    • Terms and Conditions

    Type above and press Enter to search. Press Esc to cancel.