ETFs v. Cash and Futures YTD… With a Special Silver Guest Appearance

As we once again visit the performance of commodity ETFs versus the cash and future markets, the results are not surprising. Save corn, ETFs continue to underperform futures, leading us to echo our advice of buying 12 month futures and rolling them annually instead of trying to get long commodity exposure via ETFs. This is especially pronounced with Crude. But right now, the majority of ETF news is circulating around silver and its astronomical ascent, so we decided to take a look at the performance of a long-only silver futures ETF- Powershares DB Silver (DBS)- as well.

ETF Comparison to Cash and Futures

You’ll notice that even with (arguably) the hottest commodity out there at the moment, the silver ETF underperforms. This is of particular concern with silver, as, historically, it has a nasty tendency of falling just as fast as it climbs. The last time silver was at these levels was in 1980, and the chart below demonstrates the rate of its descent then [past performance is not necessarily indicative of future performance]. If you’re in a long-only silver ETF and silver gives a repeat performance of its last climb, you’ll be far from happy with the results.

Silver's Past Ascent
Source: Chartsrus.com

This is yet another case for investing in managed futures. In futures, you can capitalize on surges such as this one, but if the trend shifts, you can still generate returns by going short- though timing is everything. Unlike trying to invest in futures contracts on your own and worrying about when to get out of your long position, in managed futures, you have pros who (generally speaking) have risk thresholds and will ultimately be looking for opportunities to go short the market to take profits or cut losses.  For example, over the past 2 days, just as Silver has been spiking up, 2 of the managers we track (James River Capital Corp and Integrated Managed Futures Corp) have been lightening their long exposure to Silver…is the fact that the pros are getting out a sign that a top is near?? Time will tell…

One comment

  1. Great article. I mostly trade index futures but I will check out your ETFs.

Write a Comment

Disclaimer
The performance data displayed herein is compiled from various sources, including BarclayHedge, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.

Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history.

Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.

Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.

Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.

RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.

See the full terms of use and risk disclaimer here.

Disclaimer
The performance data displayed herein is compiled from various sources, including BarclayHedge, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.

Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history.

Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.

Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.

Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.

RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.

See the full terms of use and risk disclaimer here.

logo