Interest in Commodity ETFs Continues to Drop

Given the current global and national economic environment, investors and advisors remain keen on finding new asset classes to put funds into. The main topics and asset classes investors continue to engage with are U.S. fixed income, U.S. equities, and international equities. This comes as no surprise as these topics are typically ones investors prefer to engage with the most.

The question that then arises is: Which asset classes and investment themes are advisors not as interested in? 

In this article, using data obtained from the Explorer platform, we will delve deeper into one of the asset classes that is not catching the attention of investors and advisors. We will also use data fromLOGICLY to look at some key characteristics of funds in that asset class. Using this data, we hope to give advisors insight into this asset class’s overall performance and try to answer the question of why attention continues to drop in it.

Advisor Interest Continues to Drop

Commodities are the asset class with the most significant dip in financial advisors’ interest. When referring to how the interest is measured, it is from data collected from the number of digital interactions investors and advisors engage with specific topics on VettaFi platforms. Since the beginning of June, financial advisor engagement with commodities content has dropped 20% per data from Explorer. The long-term data also show this trend as YTD data shows that it has dropped 14% per data from Explorer. The topics that advisors have shown the most interest in during this time frame are leveraged ETFs, U.S. fixed income, and U.S. equities. On top of that, the asset class has lost -2.0% of growth in its AUM YTD and -15.9% in the last year. Commodity ETFs have also lost more than 2 billion inflows YTD.

The significant drop in engagement and flows can be due to many different reasons, but one may be the sporadic nature of the asset class. It is a constant tendency that this asset class has shown unless it is in a super cycle. In addition, the economy as a whole this year has seen an increase in interest in the tech sector. As advisors and investors have paid significant attention to artificial intelligence companies and ETFs. Both of these reasons can be why advisor interest has dropped significantly this year.