After a strong start to the year, commodities, as measured by the Bloomberg Commodity Total Return Index (BCOMTR or “the Index”), consolidated in the second quarter of 2026 as the Strait of Hormuz situation eased. Commodities nonetheless continued to outpace both U.S. and global equities over the first half of 2026, with the Index returning over 14% year-to-date through June 30, 20261.
Market Review
Though COMD outperformed the BCOMTR benchmark, the asset class pared early 2026 gains, declining -8% during the second quarter2. Energy led the index decline, falling -14% during the second quarter as traffic through the Hormuz Strait began to normalize later in the quarter following the US-Iran agreement3. Brent and WTI oil fell -21% and -18% respectively, with their curves flipping from record backwardation to contango4. The product market proved more resilient as global refining capacity remains constrained.
Precious and industrial metals moved in opposing directions. Gold and silver fell roughly -14% and -22% respectively, as the market priced in a more hawkish Federal Reserve5. Industrial metals told a different story, rising 1% for the quarter6. Copper gained over +9% and zinc rose +3% on resilient underlying demand and constrained supply7.
Agriculture performance was more mixed, with the Bloomberg Agriculture Subindex (BCOMAG index) declining -4% during the quarter8. Cocoa surged over +47% on growing risks of a super El Nino, with coffee adding +12% on tight supply9. Grains broadly declined alongside energy prices, with corn falling -17%, wheat declining -9%, and soybeans down -8%10.
Fund Performance & Attribution
COMD outperformed the broad BCOMTR benchmark by +2.92%, returning -5.16% (NAV return) during the second quarter versus a -8.08% decline in the benchmark11. On a market price return basis, the fund returned -5.14% during the quarter12. Since the fund’s inception on February 10, 2026, the fund has returned +3.73% (NAV)13.
The fund’s positioning further out on the energy curve was the leading contributor to performance this quarter as the oil futures curve flipped from record backwardation to contango following the US-Iran deal14,. The fund’s overweight positioning in cocoa also added to relative performance. The main detractors to performance were the fund’s underweight positioning in coffee and overweight position in gold, with the precious metals’ impact partially offset by the fund’s underweight in silver, which underperformed gold. During the quarter the fund entered a new position in cocoa while also sold out of a position in platinum.
The performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when sold or redeemed, may be worth more or less than their original cost and current performance may be lower or higher than the performance quoted. Performance current to the most recent quarter- and month-end is available at COMD - Global X Commodity Strategy ETF. Expense Ratio: 0.55%.
Holdings are subject to change.
Outlook
We continue to believe commodities can offer various benefits to a portfolio, including a potential hedge against inflation and a weaker US dollar. Looking ahead, US consumer price inflation appears to have peaked in May, and we believe the Federal Reserve's hawkish stance has peaked alongside it, leaving room for a weaker dollar ahead. That backdrop should support demand for gold, with speculative positioning in precious metals now back to more normalized levels while central banks have remained net buyers of the bullion15. We are also constructive on the longer-term thesis for copper, where structural demand continues to build against a more challenged supply outlook. Within energy, we continue to favor downstream products given tight global refining capacity. In agriculture, we see further upside for cocoa and sugar on growing El Nino supply risk. Overall, we continue to believe commodities play an important role within a portfolio, especially as a way to potentially protect against inflation. COMD provides active commodity allocations while maintaining its positioning further out on the futures curve in aims of reducing the impact of rolls over time. The fund provides active commodity security selection with the fee structure, and liquidity of its ETF wrapper.
Why This Fund
Commodities once again proved their resilience in the first half of 2026, providing protection against accelerating inflation and outperforming both equities and fixed income.16 We see inflation and portfolio concentration as structural risks for many portfolios, with growing El Niño concerns and geopolitical energy supply shocks adding to macroeconomic uncertainty and underscoring the current need to diversify. COMD provides broad exposure to commodities markets, including agriculture and energy, while the fund's active approach to futures contract selection aims to reduce the costs associated with rolling futures contracts on performance.
