Commodities have shown extreme weakness this year while many
other sectors have held up quite well. However, recent trends in
the space have been encouraging, as most commodities have rebounded
from their lows or are even moving higher.
This is especially true with the industrial metals that have
attracted investor interest in the past couple of weeks, leading to
huge inflows. China, the major driver of industrial metals, is
showing signs of stabilizing with strong trade data leading
many to feel more bullish on the space.
Improving demand from China, Euro zone escaping recession, tight
supply conditions, and a weak dollar of late are adding to the
bullish fundamentals for the metals (read: Copper ETFs Surge on
Solid China Trade Data).
Further, the increased chances of the Fed curtailing stimulus
have led to uncertainty in the market. Investors are thinking that
the equity markets have reached the highest level and could slump,
or stay range bound, from here. As such, they are moving to
commodities, which look cheaper at current levels.
Given the bullish trend at present, investors may want to
consider cycling into the industrial metal space in order to obtain
a nice momentum play as we move ahead in the final part of the
year.
While looking at individual metals is certainly an option, focus
on top ranked broad industrial metal ETFs could be a less risky way
of tapping the same broad trends (see more ETFs in the Zacks ETF
Center).
Top Ranked Industrial Metal ETFs in Focus
We have found a number of ETFs or ETNs that have the Zacks ETF
Rank of 2 or ‘Buy’ rating in the industrial metal space and are
thus expected to outperform in the months to come (read: all the
Top Ranked ETFs).
While all these top ranked products are likely to outperform,
the following three funds could be good choices to tap into the
space. This trio has enjoyed strong momentum over the past few
weeks, and has potentially superior weighting methodologies or
focuses which could allow them to continue leading the industrial
metal space in the months ahead too.
PowerShares DB Base Metals Fund
(DBB)
This product tracks the DBIQ Optimum Yield Industrial Metals
Index Excess Return, which is a rules-based index consisting of
futures contracts on some of the most heavily traded base metals
commodities in the world.
The fund holds three commodities – aluminum, copper, and zinc –
in equal weights. The ETF has amassed $273.9 million in its asset
base and trades in average daily volume of more than 230,000
shares. This would probably ensure slight or no additional cost
beyond the expense ratio of 0.78%.
Though DBB lost about 10% in the year-to-date time frame, it
added over 6% so far this month, suggesting a modest turnaround may
be at hand in this product (read: 2 Commodity ETFs Offering
Investors Sweet Returns).
ETRACS CMCI Industrial Metals Total Return ETN
(UBM)
This ETN provides exposure to the portfolio of commodity futures
through a single investment by tracking the UBS Bloomberg CMCI
Industrial Metals Index Total Return. The benchmark seeks to
deliver returns from a basket of six futures contracts representing
the industrial metals sector. The commodity futures contracts are
diversified across five constant maturities ranging from three
months to three years out.
In terms of holdings, big chunks of the assets are tied to
copper and high grade copper, as these two account for 46% of the
assets. Aluminum (30%), zinc (10%), nickel (10%) and lead (5%)
round out the rest of the portfolio, meaning exposure is reasonably
well spread out.
The product is less popular and illiquid with AUM of less than
$5 million and average daily volume of less than 9,000 shares. The
ETN charges 65 bps in fees per year from investors and gained over
7% so far in the month. Still, the note is down 8.5% year-to-date
so the product has a ways to go to get back to breakeven for
2013.
iPath Dow Jones UBS Industrial Metals Sub Index Total
Return ETN (JJM)
This ETN follows the Dow Jones-UBS Industrial Metals Subindex
Total Return, which delivers returns through an unleveraged
investment in the futures contracts on four industrial metal
commodities. The future contracts for aluminum, nickel and zinc are
traded in the LME while copper future contract is traded on the
COMEX.
The note has a slight tilt towards copper that makes up 42% of
assets. Aluminum, nickel and zinc account for 35%, 13%, and 10%
share, respectively. The ETN has been able to manage assets worth
$22.9 million while volume is light. It also has a steep expense
ratio of 75 bps.
Though the note lost over 12.6% year-to-date, it added about 7%
this month suggesting it has been a strong momentum play in the
commodity world (read: 5 Silver ETFs Surging on Commodity
Strength).
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PWRSH-DB B METL (DBB): ETF Research Reports
IPATH-DJ-A I MT (JJM): ETF Research Reports
E-TRC UBC I MIL (UBM): ETF Research Reports
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E-Tracs Usb Bloomberg Commodity Index Exchange Traded Notes E-Tracs Ubs Bloomberg Cmci Industrial Etn (delisted) (AMEX:UBM)
Graphique Historique de l'Action
De Nov 2024 à Déc 2024
E-Tracs Usb Bloomberg Commodity Index Exchange Traded Notes E-Tracs Ubs Bloomberg Cmci Industrial Etn (delisted) (AMEX:UBM)
Graphique Historique de l'Action
De Déc 2023 à Déc 2024