Why Has This Commodities ETF Outperformed So Much?
Well, so far this year, SDCI is significantly outperforming plain vanilla beta commodity ETF peers by a pretty meaningful margin. Congrats on that. It's especially impressive given the chaos of tariffs and the geopolitical turmoil that's happening right now. What has contributed to SDCI's success, and how might investors use it inside their portfolios?
SDCI is not an active fund, but it uses a systematic, rules-based system. It rebalances every month, and the goal is to give investors exposure to commodities that may be a little off the beaten path. Take cocoa, for example. It was up 300% last year. A lot of commodity funds either don't have an exposure to cocoa, or it's a very small exposure.
We equal weight the commodities we hold, so we can have a more meaningful exposure to things like cocoa, and to things like cattle this year. Everybody's seen beef prices are up, and that's because cattle herds are at a 70-year low. So we have exposure through those rules. We can kind of get into those commodities that you wouldn't expect.
The rules look at something that indicates low inventory. If inventories are low relative to demand, that commodity has a higher chance of outperforming over time. Investors can absolutely use SDCI as a core commodity holding, as a broad commodity allocation, and as a diversification strategy. It was designed to give you strong correlation to traditional commodity indices and be that broad commodity fund, but hopefully offer a little extra in terms of the system and the allocation to different commodities. We've seen that play out over the years, and the fund's been a performance leader, and we're very pleased with that.
