{"id":9587,"date":"2023-08-07T02:12:26","date_gmt":"2023-08-07T02:12:26","guid":{"rendered":"https:\/\/isafespend.com\/investing\/shunned-commodity-etfs-starting-to-perk-up-as-fed-watches-grain-prices\/"},"modified":"2023-08-07T02:12:27","modified_gmt":"2023-08-07T02:12:27","slug":"shunned-commodity-etfs-starting-to-perk-up-as-fed-watches-grain-prices","status":"publish","type":"post","link":"https:\/\/isafespend.com\/?p=9587","title":{"rendered":"Shunned commodity ETFs starting to \u2018perk up\u2019 as Fed watches grain prices"},"content":{"rendered":"
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Hello! This week\u2019s ETF Wrap digs into commodity ETFs rising so far this month. <\/p>\n

Please send feedback and tips to christine.idzelis@marketwatch.com or isabel.wang@marketwatch.com. You can also follow me on Twitter at\u00a0@cidzelis<\/a>\u00a0and find me on\u00a0LinkedIn. Isabel Wang is on Twitter at\u00a0@Isabelxwang<\/a>.<\/p>\n

Sign up\u00a0<\/strong>here<\/strong>\u00a0for our weekly ETF Wrap.<\/strong><\/p>\n

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

Shares of the Invesco DB Commodity Index Tracking Fund
\n DBC,
\n +0.16%<\/bg-quote>
\n 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
\n DBA,
\n +0.09%<\/bg-quote>
\n has risen 4.9% in July, bringing its gains to 9.7% over the same period.\u00a0<\/p>\n

Commodities ETFs are \u201ca place that is starting to perk up again,\u201d 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.\u00a0<\/p>\n

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.\u00a0<\/p>\n

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.\u00a0<\/p>\n

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 \u201coff the table,\u201d he said by phone, pointing to the outcome of the Fed\u2019s 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.<\/p>\n

The U.S. economy has been resilient as the Fed raises interest rates to combat inflation that remains elevated even as it\u2019s been easing from last year\u2019s June peak.<\/p>\n

Read:<\/strong> Fed no longer foresees a U.S. recession \u2014 and other things we learned from Powell\u2019s press conference<\/p>\n

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.<\/p>\n

The abrdn Bloomberg Industrial Metals Strategy K-1 Free ETF
\n BCIM,
\n -0.68%<\/bg-quote>
\n has gained 3.1% this month through Thursday, but it remains down about 10% so far in 2023, according to FactSet data.\u00a0<\/p>\n

Meanwhile, crude oil prices have jumped in July, with West Texas intermediate crude
\n CL00,
\n +0.11%<\/bg-quote>
\n closing above $80 a barrel on Thursday. And wheat prices have risen this month amid Russia-Ukraine tensions.<\/p>\n

Read:<\/strong> U.S. oil benchmark closes above $80 a barrel for first time since April<\/p>\n

Also see:<\/strong> Wheat prices gain over 8% as Russia-Ukraine tensions rise after the suspension of the grain deal<\/p>\n

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\u2019s exchange-traded fund that provides exposure to wheat
\n W00,
\n +2.65%<\/bg-quote>.<\/span>
\n \u00a0<\/p>\n

Shares of the Teucrium Wheat Fund
\n WEAT,
\n +0.62%<\/bg-quote>
\n 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.\u00a0<\/p>\n

Fed Chair Jerome Powell said Wednesday during his news conference that grain prices went up on Russia\u2019s withdrawal from Black Sea grain deal earlier this month, but \u201cthey remain well below their peaks of last spring.\u201d He said the moves seen so far are \u201cnot expected to make a significant contribution to U.S. inflation,\u201d but the Fed will be watching the situation \u201ccarefully.\u201d<\/p>\n

As usual, here\u2019s your look at the top- and bottom-performing ETFs over the past week through Wednesday, according to FactSet data.<\/p>\n

The good\u2026<\/h2>\n\n\n\n\n\n\n\n\n
\n Top Performers<\/strong><\/p>\n<\/td>\n\n %Performance<\/strong><\/p>\n<\/td>\n<\/tr>\n
\n KraneShares CSI China Internet ETF
\n KWEB,
\n -0.84%<\/bg-quote>\n <\/td>\n		\n 7.4<\/p>\n<\/td>\n<\/tr>\n
\n iShares MSCI Brazil ETF
\n EWZ,
\n -0.71%<\/bg-quote>\n <\/td>\n		\n 5.5<\/p>\n<\/td>\n<\/tr>\n
\n WisdomTree China ex-State-Owned Enterprises Fund
\n CXSE,
\n -1.18%<\/bg-quote>\n <\/td>\n		\n 5.4<\/p>\n<\/td>\n<\/tr>\n
\n iShares MSCI China ETF
\n MCHI,
\n -1.03%<\/bg-quote>\n <\/td>\n		\n 5.0<\/p>\n<\/td>\n<\/tr>\n
\n iShares China Large-Cap ETF
\n FXI,
\n -1.42%<\/bg-quote>\n <\/td>\n		\n 5.0<\/p>\n<\/td>\n<\/tr>\n
\n 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<\/p>\n<\/td>\n\n <\/td>\n<\/tr>\n<\/table>\n

\u2026and the bad<\/h2>\n

New ETFs<\/h2>\n
    \n
  • \n Franklin Templeton announced on Thursday the launch of the BrandywineGLOBAL \u2013 U.S. Fixed Income ETF
    \n USFI,
    \n +1.21%<\/bg-quote>,<\/span>
    \n a fund that buys investment-grade and U.S. dollar-denominated fixed-income securities.<\/p>\n<\/li>\n
  • \n PGIM said July 26 that it launched the PGIM AAA CLO ETF
    \n PAAA,
    \n +0.03%<\/bg-quote>
    \n to give investors exposure to the growing $1.2 trillion collateralized-loan-obligation market.<\/p>\n<\/li>\n
  • \n YieldMax announced on July 25 the launch today of the YieldMax AMZN Option Income Strategy ETF
    \n AMZY,
    \n +8.77%<\/bg-quote>,<\/span>
    \n \u201cwhich seeks to generate monthly income via a synthetic covered call strategy on Amazon.com.\u201d <\/p>\n<\/li>\n<\/ul>\n

    Weekly ETFs reads<\/h2>\n<\/p><\/div>\n<\/div>\n