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A hardscrabble year for commodity funds

jnelson@globeandmail.com

What are we looking for?

How commodity funds have stacked up in the past six months.

The screen

We screened for the 15 best-performing funds for the six months ended Sept. 30. The U.S. dollar, segregated and duplicate versions of funds were excluded, along with funds closed to new investors.

These funds invest first and foremost in physical commodities, or use derivatives to increase exposure to this sector.

What did we find?

Only one fund managed a positive return in the period as the commodities sector continues to get pummelled from all sides.

The Horizons Nymex Crude Oil ETF managed a 2.23-per-cent gain in the six-month period, while other funds - from agriculture to base metals - struggled to eke out profits.

The Horizons fund is a passively managed index ETF, but it is unusual in that it offers non-leveraged exposure to crude oil futures contracts.

The second-best performer was the BMO Energy Commodities Index ETF, which shed 0.2 per cent in the period. This fund is also focused on energy, with 34 per cent of assets allocated toward crude oil.

While oil and gas have had a volatile year, funds invested in gold, precious metals and mining stocks have also suffered in recent months.

The BMO Precious Metals Commodities Index ETF and the CI Signature Gold Corporate Class fund were both down nearly 18 per cent in the period.

And the bad news for commodity funds continues. A recent commodity report by Scotiabank is projecting further declines until year-end in its all commodities price index, which is a U.S. dollar-based index of principal Canadian exports. Its largest weighting is toward oil and gas, followed by metal and minerals, agriculture and forest products.

Canadian commodities have been under pressure because of global factors such as the recession and unrest in the euro zone and a lacklustre U.S. economic recovery, commodity market specialist Patricia Mohr notes in the report. The "correction" in commodity prices that has been going on since April, 2011, has been especially tough on metals and minerals, she noted.

But there's cause for optimism for both commodity funds and investors. The worst of the pricing correction "should be largely over by year-end," Ms. Mohr notes in the report.

*****

COMMODITY FUNDS, SIX MONTHS TO SEPT. 30

% return (Sept. 30)% returnAssets
FundTicker6-mo.1-yr.3-yr.5-yr.10-yr.201220112010MER($-mil)
Horizons NYMEX Crude Oil ETFHUC-T2.2%4.6%1.4%-7.8%-1.2%4.8%0.975.4
BMO Energy Commodities Idx ETFZCE-T-0.2%0.4%-0.4%0.753.2
iShares Broad Commod Idx C$-Hgd Com ETFCBR-T-3.2%-6.9%-0.9%-0.4%0.8753.0
BMO Base Metals Commodities Idx ETFZCB-T-6.7%-17.1%-0.7%0.752.0
BMO Agriculture Commodities Idx ETFZCA-T-7.1%-17.8%2.4%0.746.7
Horizons Natural Gas Yield ETFHNY-T-13.0%-10.5%0.8511.2
Horizons NYMEX Natural Gas ETFHUN-T-13.5%-10.1%-19.8%-8.2%-40.4%-37.6%0.989.2
Horizons Gold Yield ETFHGY-T-16.1%-23.5%0.9047.8
Sprott Gold Bullion Fd-A-16.1%-22.4%-0.6%3.3%11.2%21.4%1.10170.7
Mackenzie Gold Bullion Cl A-16.4%-23.2%-1.2%1.6%8.4%2.5985.8
iShares Gold Bullion (CAD-Hedged) ETFCGL-T-17.2%-25.6%0.0%5.5%10.9%26.6%0.50366.2
Horizons COMEX Gold ETFHUG-T-17.4%-26.1%-1.1%5.4%8.4%26.8%0.819.2
BMG Gold BullionFund-A-17.5%-24.5%-2.7%0.1%10.7%15.0%3.06103.1
CI Signature Gold Corporate Class-17.9%-29.1%-1.7%-2.5%2.4643.7
BMO Precious Metals Commodities Idx ETFZCP-T-17.9%-27.7%5.3%0.744.2
S&P/TSX Total Return1.9%7.1%4.1%4.8%8.4%7.2%-8.7%17.6%
S&P 500 Composite Total Return Idx($Cdn)11.2%28.0%17.2%8.3%4.0%15.7%7.3%12.2%
Source: Lipper

© 2007 The Globe and Mail. All rights reserved.

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