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In Commodities Funds, Short Was Best This Week

A major appeal of the NCAA March Madness tournament is the near-certainty of some huge upsets. The fund world may have taken inspiration from that: A big investment upset -- in commodities -- made selection of a fund sector of the week for the period ended March 20 a slam dunk.

After sprinting to historic highs, commodity prices imploded as the truncated week drew to a close. Both gold and petroleum ascended to inflation-adjusted record altitudes before going into free fall.

Gold rocketed above $1,000 an ounce before plunging Wednesday, and ended the week struggling to keep its head above the $900 level. Similarly, crude oil topped $110 a barrel and then skidded sharply to fluctuate around the $100 level.

Analysts speculated that problems resulting from the credit crunch forced hedge funds to liquidate commodities contracts in order to raise capital. In addition, a strengthening of the dollar toward the end of the week diminished the appeal of tangible holdings such as commodities.

Because most other major commodities followed similar patterns, albeit with less dramatic moves than gold and oil, commodity-related funds were selected for highlighting in the accompanying tables.

Candidates for the lists included the usual suspects of precious metals, energy and natural resources funds. In addition, open-end, closed-end and exchange traded funds with commodity futures contracts and related investments were also considered.

The winners list includes only four funds with "inverse" investment strategies, three in the energy sector and one in precious metals.

The MACROshares Oil Down Tradeable Shares ETF (DCR) is designed to track the settlement price of the NYMEX Division Light Sweet Crude Oil Futures Contract of the designated maturity. The fund tracks the downward movement of an appropriate index or a benchmark price and, therefore, moves opposite the price of petroleum.

Another member of the quarter of positive commodity-related performers, the ProShares Ultra Short Oil & Gas ETF (DUG) is leveraged, as well as designed to perform inversely to energy prices.

Best-Performing Commodity-Related Funds
Ranked by Returns for the Week Ended March 20

Name & Ticker TSC Ratings
Fund Type
Total Return
MACROshares Oil Down Tradeable Shares (DCR) E- ETF 27.223%
ProFunds Short Precious Metals Inv (SPPIX) U Open End 18.677%
ProShares Ultra Short Oil & Gas (DUG) E- ETF 10.338%
ProFunds Short Oil & Gas Inv (SNPIX) U Open End 5.668%
iPath DJ-AIG Livestock Total Ret'n Sub-Idx (COW) U ETF -0.827%
PowerShares WilderHill Progressive Energy (PUW) C- ETF -3.297%
ING Risk Managed Natural Resources Fund (IRR) C Closed End -4.096%
Rydex Ser -Mngd Futures Strgy A (RYMTX) U Open End -4.127%
First Trust Energy Income & Growth Fund (FEN) C Closed End -5.106%
iShares DJ U.S. Energy Sector Idx Fund (IYE) B+ ETF -5.897%
Source: Bloomberg

The opposite extreme of the commodities-related funds array is dominated by seven precious-metals vehicles. Three -- the least damaged of the 10 laggards -- are specifically gold funds. But sharing the stage are two silver funds that placed among the four worst performers in the sector for the week.

The broad nature of the commodity collapse is witnessed by the inclusion of two agricultural commodities funds amongst the bottom 10 performers in that category, with a general commodity fund, the leveraged Direxion Commodity Bull 2X Fund (DXCLX) rounding out the trailing 10 funds.

Worst-Performing Commodity-Related Funds
Ranked by Returns for the Week Ended March 20

Name & Ticker TSC Ratings
Fund Type
Total Return
ProFunds-Precious Metals Ultra Inv (PMPIX) C- Open End -23.943%
PowerShares DB Silver Fund (DBS) A+ ETF -18.77%
Direxion Commodity Bull 2X Fd (DXCLX) C- Open End -18.543%
iShares Silver Trust (SLV) B- ETF -18.156%
RVS Precious Metals & Min Fund A (INPMX) C- Open End -15.484%
iPath DJ-AIG Grains Total Ret'n Sub-Idx ETN (JJG) U ETF -15.367%
iPath DJ AIG Agric. Total Ret'n Sub-Idx ETN (JJA) U ETF -15.143%
Midas Fund (MIDSX) B Open End -15.049%
OCM Gold Fund (OCMGX) C+ Open End -14.848%
Fidelity Select Gold (FSAGX) B Open End -14.809%
Source: Bloomberg
Richard Widows is a senior financial analyst for Ratings. Prior to joining, Widows was senior product manager for quantitative analytics at Thomson Financial. After receiving an M.B.A. from Santa Clara University in California, his career included development of investment information systems at data firms, including the Lipper division of Reuters. His international experience includes assignments in the U.K. and East Asia.

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COW $23.18 -0.30%
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DUG $59.13 -0.92%


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