November 14, 2025
Shunned commodity ETFs starting to ‘perk up’ as Fed watches grain prices

Shunned commodity ETFs starting to ‘perk up’ as Fed watches grain prices

Shunned commodity ETFs starting to ‘perk up’ as Fed watches grain prices – MarketWatch “,”email”:”[email protected]”,”url”:”https://www.marketwatch.com/topics/journalists/christine-idzelis”,”image”:”https://images.mktw.net/im-786311?width=816&height=816″,”sameAs”:”https://www.marketwatch.com/topics/journalists/christine-idzelis”}],”thumbnailUrl”:”https://images.mktw.net/im-341402?width=1280&size=1″}] ]]]]]]]]>]]]]]]>]]]]>]]>

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Published: July 27, 2023 at 5:25 p.m. ET [] A resilient U.S. economy may support commodity prices, says abrdn’s Bob Minter

MarketWatch illustration/iStockphoto

Hello! This week’s ETF Wrap digs into commodity ETFs rising so far this month.

Please send feedback and tips to [email protected] or [email protected]. You can also follow me on Twitter at @cidzelis and find me on LinkedIn. Isabel Wang is on Twitter at @Isabelxwang.

Sign up here for our weekly ETF Wrap.

Exchange-traded funds that provide exposure to commodities are rising lately, but ETF investors have been shunning them after a recent broad correction.

Shares of the Invesco DB Commodity Index Tracking Fund DBC, -0.24% have jumped 7.6% so far this month through Thursday, paring year-to-date losses to a modest 0.9%, according to FactSet data. The Invesco DB Agriculture Fund DBA, -0.90% has risen 4.9% in July, bringing its gains to 9.7% over the same period. 

Commodities ETFs are “a place that is starting to perk up again,” said Todd Sohn, an ETF strategist at Strategas, in a phone interview. Meanwhile, the Invesco DB Commodity Index Tracking Fund and Invesco DB Agriculture Fund have seen outflows this year, he said. 

Investors have pulled $487 million from the Invesco DB Commodity Index Tracking Fund this year, after about $7.5 million of inflows over the past week, according to FactSet data as of July 26. And the Invesco DB Agriculture Fund has seen $302 million of outflows in 2023, including more than $4 million in the past week. 

Both ETFs jumped in 2021 as inflation was climbing, but the Invesco DB Commodity Index Tracking Fund is now recovering from a meaningful correction, according to Sohn. That particular ETF, which broadly tracks commodities in the energy, metals and agriculture sectors via futures contracts, sank about 28% from June 9, 2022 through May of this year, he said. 

A stronger-than-expected economy this year may lead to higher prices for energy and metals, according to Bob Minter, director of ETF investment strategy at abrdn. Federal Reserve staff have taken a forecast for a recession “off the table,” he said by phone, pointing to the outcome of the Fed’s policy meeting on Wednesday. And the Commerce Department on Thursday estimated that U.S. gross domestic product rose at an annual 2.4% pace in the second quarter, stronger growth than economists expected.

The U.S. economy has been resilient as the Fed raises interest rates to combat inflation that remains elevated even as it’s been easing from last year’s June peak.

Read: Fed no longer foresees a U.S. recession — and other things we learned from Powell’s press conference

Fading recession fears may prompt investors to look for stronger commodity fundamentals in the second half of 2023, according to Minter. Low inventories for industrial metals such as copper, aluminum, nickel, zinc and lead may help support a rally, he said.

The abrdn Bloomberg Industrial Metals Strategy K-1 Free ETF BCIM, -0.56% has gained 3.1% this month through Thursday, but it remains down about 10% so far in 2023, according to FactSet data. 

Meanwhile, crude oil prices have jumped in July, with West Texas intermediate crude CL00, +1.32% closing above $80 a barrel on Thursday. And wheat prices have risen this month amid Russia-Ukraine tensions.

Read: U.S. oil benchmark closes above $80 a barrel for first time since April

Also see: Wheat prices gain over 8% as Russia-Ukraine tensions rise after the suspension of the grain deal

Jake Hanley, senior portfolio strategist at Teucrium, said in a phone interview that he has recently fielded more interest from financial advisers in the firm’s exchange-traded fund that provides exposure to wheat W00, -0.94%.  

Shares of the Teucrium Wheat Fund WEAT, -0.56% have surged 9.6% this month through Thursday, according to FactSet data. Still, the fund is down 11.5% this year, with around $13 million in outflows in 2023 as of July 26, according to FactSet data. 

Fed Chair Jerome Powell said Wednesday during his news conference that grain prices went up on Russia’s withdrawal from Black Sea grain deal earlier this month, but “they remain well below their peaks of last spring.” He said the moves seen so far are “not expected to make a significant contribution to U.S. inflation,” but the Fed will be watching the situation “carefully.”

As usual, here’s your look at the top- and bottom-performing ETFs over the past week through Wednesday, according to FactSet data.

[]The good…

Top Performers %Performance
KraneShares CSI China Internet ETF KWEB, -2.16% 7.4
iShares MSCI Brazil ETF EWZ, -3.02% 5.5
WisdomTree China ex-State-Owned Enterprises Fund CXSE, -1.52% 5.4
iShares MSCI China ETF MCHI, -1.45% 5.0
iShares China Large-Cap ETF FXI, -1.62% 5.0
Source: FactSet data through Wednesday, July 26. Start date July 20. Excludes ETNs and leveraged products. Includes NYSE, Nasdaq and Cboe traded ETFs of $500 million or greater

[]…and the bad

[]New ETFs

  • Franklin Templeton announced on Thursday the launch of the BrandywineGLOBAL – U.S. Fixed Income ETF USFI, +0.06%, a fund that buys investment-grade and U.S. dollar-denominated fixed-income securities.
  • PGIM said July 26 that it launched the PGIM AAA CLO ETF PAAA, -0.04% to give investors exposure to the growing $1.2 trillion collateralized-loan-obligation market.
  • YieldMax announced on July 25 the launch today of the YieldMax AMZN Option Income Strategy ETF AMZY, +0.01%, “which seeks to generate monthly income via a synthetic covered call strategy on Amazon.com.”

[]Weekly ETFs reads

How you can profit in the stock market from an incredible financial services trend over the next 20 years

The coming “great wealth transfer” has been covered, but right now stocks of companies set to ride a two-decade growth wave are trading at low valuations.

[]Christine Idzelis is a markets reporter at MarketWatch and is based in New York.

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