Commodities May Be The Next Big Thing; Here Are 3 ETFs To Get Started
Bloomberg this weekend reported on the boom that is taking shape in the commodities markets.
What Happened: Investors are moving from the bull market in stocks to areas further afield in search of returns in a very-low interest rate environment.
“Commodities haven’t been this sexy since the mid-2000s, when China was stockpiling everything from copper to cotton,” Bloomberg reports.
The story points to several developments:
• JPMorgan Chase & Co. (NYSE: JPM) recommending a move away from bonds toward materials
• Hedge fund bets at their highest levels in a decade, totalling nearly $120 billion
• Agricultural markets also up more than 30% in the last decade
• Corn at a seven-year high
• Soybeans and wheat at their highest prices since 2014
• Copper having the potential to rally 20% to more than $10,000 a metric ton, according to Francisco Blanch, head of global commodities research at Bank of America
Quick Ways To Jump In: If this makes you itchy to get in on the action, then here are three ETFs and two copper funds that can give you exposure to metals and agriculture, which we gathered by asking around the Benzinga staff for some quick ways to place bets.
Note that this is by no means a comprehensive list but some simple ways to buy if you believe these commodities will continue their rise.
• Invesco DB Agriculture Fund (NYSE: DBA) With $691.8 million in assets under management, this is one of the largest ETFs that holds actual agricultural commodities. Its 26-week return rate stands at 20.79%, according to ETF Database. Its share price is up 20.79% over the past six months and closed last week at $16.56.
• For an ETF that holds agricultural stocks, the largest is VanEck Vectors Agribusiness ETF (NYSE: MOO). It has $914.5 million in assets under management and “the best ticker symbol out there,” says Spencer Israel, producer of Benzinga’s PreMarket Prep. It has a 26-week return rate of 31.32%, according to ETF Database. It is up 29.89% over the past six months and closed last week at $82.14.
• The VanEck Vectors Rare Earth/Strategic Metals ETF (NYSE: REMX) holds stocks of companies that produce rare earth metals such as titanium, molybdenum, cerium, manganese and tungsten. It has $421.1 million in assets under management. The ETF’s 26-week return rate is 89.57%, and its share price closed last week at $72.38, up 87.90% over six months.
• For pure copper plays, also look into the Barclays iPath Bloomberg Copper Subindex (NYSEARCA: JJC), which is an exchange-traded note, and the United States Copper Index Fund (NYSE: CPER), an exchange-traded product.