The UBS Bloomberg Constant Maturity (“CM”) Commodity Total Return Index (ticker: CMCITR), a modern commodity index designed to reduce the potential negative effects of contango, returned 1.79 percent in November, bringing year-to-date (YTD) performance through the end of the month to 4.11 percent, according to data released today by Van Eck Global and Bloomberg.
Industrial metals were the best performing sector in November due to optimism spurred by positive economic news out of the U.S. and China. Energy, livestock and precious metals all posted positive gains on global growth optimism. Agriculture was the worst performing sector, declining on improved supply expectations for the South American crop, continued dry weather across the U.S. plains and weaker than expected U.S. exports.
CMCITR roll yield was negative for the month. WTI contango and Brent backwardation both narrowed, while natural gas contango narrowed significantly and moved into very mild levels. Sugar backwardation and wheat contango narrowed during the month. Copper moved into contango and silver contango narrowed, while gold contango widened slightly.
CMCITR outperformed the two other main “constant maturity” indexes during November and remains ahead of both on a YTD basis. These indexes include the Continuous Commodity Index (CCITR: +0.88 percent in November; -1.77 percent YTD) and the Greenhaven Continuous Commodity Index (GCC: +0.89 percent in November; -0.44 percent YTD).
During November, CMCITR also outperformed the more traditional S&P Goldman Sachs Commodity Index (SPGSCITR), which returned 1.48 percent (+0.73 percent YTD), and the Dow Jones UBS Commodity Index (DJUBSTR), which returned 0.05 percent (+1.59 percent YTD). CMCITR also remains ahead of both indexes in terms of performance on a YTD basis.
CMCITR diversifies across 28 commodity components and up to five maturities. The Index was designed to minimize investment exposure to the front end of the futures curve; and by diversifying exposure across multiple maturities the Index seeks to mitigate the impact of contango, a major concern for commodity investors.
CMCITR is the underlying index for the Van Eck CM Commodity Index Fund (tickers: CMCAX, COMIX, CMCYX), an open-end, index-based mutual fund launched at the end of 2010.
Contango refers to an upward-sloping futures curve. When a curve is in contango, the futures price is greater than the spot price. As a result, the price of a futures contract is greater than the price of an expiring contract. When this occurs, investors will incur an added cost each time a contract expires and it is rolled over and replaced it with another contract.
The tables present past performance, which is no guarantee of future results and which may be lower or higher than current performance. Returns reflect applicable fee waivers and/or expense reimbursements. Had the Fund incurred all expenses and fees, investment returns would have been reduced. Investment returns and Fund share values will fluctuate so that investor’s shares, when redeemed, may be worth more or less than their original cost. Fund returns assume that dividends and capital gains distributions have been reinvested in the Fund at NAV. Index returns assume that dividends of the Index constituents have been reinvested.
Expenses: Class A: Gross 1.66%; Net 0.95%. Expenses are capped contractually until 05/01/13 at 0.95% for Class A. Caps exclude certain expenses, such as interest.
Founded in 1955, Van Eck Associates Corporation was among the first U.S. money managers helping investors achieve greater diversification through global investing. Today, the firm continues this tradition by offering innovative, actively managed investment choices in hard assets, emerging markets, precious metals including gold, and other alternative asset classes.
Market Vectors exchange-traded products have been offered by Van Eck Global since 2006 when the firm launched the nation’s first gold mining ETF. Today, Market Vectors ETFs and ETNs span several asset classes, including equities, municipal bonds and currency markets.
Van Eck Global also offers mutual funds, variable insurance products, separate accounts and alternative investments. Designed for investors seeking innovative choices for portfolio diversification, Van Eck Global’s investment products are often categorized in asset classes having returns with low correlations to those of more traditional U.S. equity and fixed income investments.
For a description of these and other risk considerations, please refer to the Fund’s prospectuses, which should be read carefully before you invest. Again, the Fund offers investors exposure to the broad commodity markets, currently by investing in a combination of commodity-linked structured notes and swaps. The Fund has obtained a private letter ruling from the IRS confirming that the income produced by certain types of structured notes constitutes “qualifying income.”
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