Top-Performing Commodity ETF Rides Wave of Strong Auto Sales

(Bloomberg) -- The best-performing exchange-traded fund in commodities is one that probably never even got on the radar of most investors.

AfricaRhodium Debentures, which tracks the performance of spot rhodium prices in rand, generated returns of more 100 percent in the past year, the most of all raw-materials ETFs tracked by Bloomberg. The fund’s total assets climbed by about half this year as the price advanced, even as investors withdrew money.

The rare silvery-white metal used to curb pollution from gasoline and diesel fueled-vehicles almost doubled in the past 12 months in the spot market, twice the pace of the rally in palladium. Rhodium climbed as supply trailed consumption for a fourth straight year, according to CPM Group. The metal, which reached the highest since 2011 in October, traded unchanged for a sixth day at $1,540 an ounce on Wednesday, according to Johnson Matthey Plc.

Top-Performing Commodity ETF Rides Wave of Strong Auto Sales

“The market has been living off its inventories,” Jeff Christian, the New York-based managing director at researcher CPM Group, said in a telephone interview. “You had some uptick in auto demand and investors have been looking at other metals” in a search for good returns, he said. That has driven the rally, he said.

The South Africa-listed AfricaRhodium, which has $58.6 million in assets, beat 786 other non-leveraged commodity ETFs tracked by Bloomberg in the past 12 months. The second-best performer is db Physical Rhodium ETC, which has $44.4 million in assets. The two represent just a fraction of the $138 billion that’s invested in all commodity ETFs tracked by Bloomberg.

Vehicle sales in China, the world’s biggest automobile market, may accelerate next year as economic expansion helps lift demand from cities and provinces in the interior parts of the country, according to the China Passenger Car Association. In the U.S., November sales outpaced analyst estimates, data from researcher Autodata Corp. showed.

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