The three best commodities funds, ranked by one-year trailing total return, are the U.S. Gasoline Fund, the U.S. Brent Oil Fund, and the Invesco DB Energy Fund. Over the past year, all three funds have seen a significant increase in value, rising at least twice as fast as a key commodities index. In addition, they have also outperformed the broader market. The first ETF mainly invests in gasoline-related futures contracts, the second focuses on crude oil futures, and the third holds a mix of oil and gas futures.
Basics
In the last twelve months, three leading commodity funds have surged by an impressive 47%, capitalizing on the sustained elevation of oil prices to an eight-year peak. These funds, namely the U.S. Gasoline Fund, the U.S States Brent Oil Fund, and the Invesco DB Energy Fund, specialize in futures contracts for various commodities, encompassing crude oil, natural gas, gasoline, and heating oil. Notably, these exchange-traded funds (ETFs) focus on providing exposure to physical commodities rather than companies engaged in commodity production.
In the U.S., around 50 commodities ETFs are actively traded, excluding inverse and leveraged funds, along with those with less than $50 million in assets under management (AUM). Over the past year, the prominent ETFs have demonstrated resilience by surpassing the S&P 500 Index's 19% decline, as well as outpacing the 19% gains of the Dow Jones Commodity Index. Despite some commodities, such as oil and gas, witnessing a decline from earlier 2022 highs, the recent relaxation of COVID restrictions by the Chinese government, in the world's second-largest economy, has revived prices.
United States Gasoline Fund LP (UGA)
- Performance Over One Year: 46.0%
- Expense Ratio: 0.97%
- Annual Dividend Yield: N/A
- Three-Month Average Daily Volume: 38,572
- Assets Under Management: $82.6 million
- Inception Date: Feb. 26, 2008
- Issuer: Marygold Cos, Inc.
UGA operates as a commodity pool, employing investor contributions to trade futures and options in commodities, specifically focusing on tracking gasoline price movements. The ETF enables investors to speculate on rising gasoline prices through investments in futures contracts related to reformulated gasoline blendstock for oxygen blending (RBOB) and other gasoline-related futures. Additionally, the fund may engage in forwards and swap contracts. Geared toward implementing short-term tactical shifts in the energy market, UGA may not be suitable for those seeking a long-term, buy-and-hold portfolio approach.
United States Brent Oil Fund (BNO)
- Performance Over One Year: 35%
- Expense Ratio: 1%
- Annual Dividend Yield: N/A
- Three-Month Average Daily Volume: 780,203
- Assets Under Management: $143.3 million
- Inception Date: June 10, 2010
- Issuer: Marygold Cos, Inc.
BNO's objective is to synchronize daily percentage changes in its net asset value (NAV) with fluctuations in the spot price of Brent Crude oil, determined by movements in the BNO's Benchmark Oil Futures Contract, a near-month futures contract on the ICE Futures Exchange. Given the distinct pricing of Brent Crude compared to West Texas Intermediate (WTI), BNO provides an avenue for alternative exposure. The fund primarily holds Brent Crude oil futures contracts and may also engage in forwards and swap contracts.
Invesco DB Energy Fund (DBE)
- Performance Over One Year: 34%
- Expense Ratio: 0.75%
- Annual Dividend Yield: N/A
- Three-Month Average Daily Volume: 99,992
- Assets Under Management: $94 million
- Inception Date: Jan. 5, 2007
- Issuer: Invesco
DBE strategically invests in futures contracts of globally traded commodities, including WTI crude oil, heating oil, Brent crude oil, RBOB gasoline, and natural gas. Its primary objective is to mirror changes in the DBIQ Optimum Yield Energy Index Excess Return, encompassing futures contracts on heavily traded energy commodities. The fund offers investors a cost-effective and convenient avenue to gain exposure to energy commodity futures. However, it's essential to note that the fund may not be suitable for all investors due to its focus on investments within highly volatile markets.
Conclusion
The U.S. Gasoline Fund, the U.S. Brent Oil Fund, and the Invesco DB Energy Fund stand out as the top-performing commodities funds, exhibiting impressive one-year returns. Surpassing a key commodities index and outperforming the broader market, these funds have demonstrated resilience and notable growth. Each fund follows a distinct investment strategy, focusing on gasoline-related futures, crude oil futures, and a mix of oil and gas futures, respectively. Investors looking for exposure to energy commodities through cost-effective means may find these funds appealing, although the volatility of these markets should be considered.