Trading News Bloomberg Commodity ETF NYSEarca:BCD
Commodities Amid Federal Rate Hikes and Market Volatility: An Insight into Bloomberg BCD Commodity ETF Strategy and Potential Returns | That's TradingNEWS
The commodity market has been particularly eventful lately, with some notable developments worth discussing. The abrdn Bloomberg All Commodity Longer Dated Strategy K-1 Free ETF (BCD), known for its diverse portfolio, has displayed a significant potential for returns in this landscape.
Recently, the Federal Reserve implemented a rate hike that had an immediate and substantial impact on metal prices. Copper, a leading metal, reached $8,669.50 per metric ton, indicating a noteworthy boost of 0.8%. Other metals were not far behind, with zinc and aluminum prices rising 2% and 1.3% respectively. Such increases confirm the interplay between the Federal Reserve's policies and the commodity market, and signal the potential for further movements in the future.
A standout among precious metals is gold. The interest in gold futures grew by 140 contracts, suggesting an upswing in its market demand. With its price moving in tandem with open interest and volume, gold has a short-term bullish outlook with the potential to surpass its July high of $1987.
The energy sector has also seen some interesting fluctuations. West Texas Intermediate Crude Oil futures fell nearly 1% after achieving a three-month high. This dip was likely due to a combination of factors, including market anticipation of the Federal Reserve's policy decision and an increase in US crude oil stocks. Nonetheless, oil prices recovered swiftly, reaching a 14-week high after the Fed's interest rate hike. Brent crude oil saw an uptick of 1%, hitting its highest level since April at $83.34 a barrel, while WTI edged up by 1.2% to $79.71 a barrel.
Within the realm of agriculture, the market has seen mixed fortunes. Old crop soybean futures rallied significantly, increasing by 30 3/4 cents, but new crop prices remained mostly unchanged. Corn and soybeans for future deliveries dipped slightly, while wheat for September delivery saw a modest increase.
Robusta coffee futures have stolen the limelight with an all-time high. These futures were up $90, or 3.4%, at $2,726 a tonne, a remarkable movement driven by the ongoing El Nino weather pattern and a scarcity of sales from Brazil and other Latin American countries.
Among ETFs, the BCD has shown promising performance. The ETF boasts a Net Asset Value (NAV) of $33.86 as of 6/30/2023. Its diverse holdings are a testament to its versatility, with top assets including Gold 100 oz Futr (16.24%), WTI Crude Future (8.03%), Brent Crude Futr (7.42%), Natural Gas Futr (6.56%), and Copper Future (5.60%).
BCD's performance has shown an upward trend over time. Despite a slight dip of -1.39% year-to-date, the ETF saw a one-month total return of 5.70%. Moreover, it has experienced an exceptional increase over a three-year period, with the NAV rising by an impressive 76.28%. Such long-term growth is a testament to BCD's resilience and potential for delivering robust returns to its investors.
In the commodities market, price movements of individual assets have been noteworthy. Coffee futures, for instance, reached an all-time high following the announcement of the El Nino weather pattern and a dip in sales from Brazil and other Latin American countries. Similarly, the Federal Reserve's interest rate hike played a key role in pushing up the prices of metals, such as copper, zinc, and aluminum. However, certain commodities saw a downturn, with the prices of corn, soybeans, and wheat for future deliveries experiencing a decrease.
The International Monetary Fund's (IMF) latest report sheds a positive light on the global economic outlook for 2023, predicting a 0.2 percentage point increase in growth from 2.8% in April to 3%.
To sum up, the BCD ETF, backed by Aberdeen Standard Investments, continues to show its potential in the ever-changing commodities market. Despite the recent market fluctuations, BCD's long-term performance has been strong, underlining its robust strategy and diverse portfolio. This wide array of holdings across different sectors, ranging from precious metals to agricultural commodities, showcases its capability to harness opportunities across various market scenarios. Thus, the BCD ETF emerges as a potent contender in the commodity ETF space, providing investors with an all-encompassing investment tool.
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