3 Hot Coffee ETFs- JO, CAFE, PBJ

| March 7, 2014 | 0 Comments

coffeeFreezing cold winter storms are raging through large parts of the country.  It’s not surprising to see coffee sales up due to increased demand.

It’s simple, the colder it is outside… the more coffee people drink.

The increase in sales is helping coffee based ETFs outperform other areas of the market. Let’s take a look at three Coffee related ETFs that are doing better than expected… 

iPath Dow Jones-AIG Coffee Total Return Sub-Index (JO)

JO is the top performing coffee ETFs over the past year.  It’s down a few points this week.  But at a current price of $38.74, it’s up a whopping 78.11% year-to-date!

This ETF invests in a single commodity sub-index currently consisting of one futures contract on the commodity of coffee. It has an expense ratio of 0.75%.

Most experts agree that coffee demand will only continue to grow.  What’s more, weather and rainfall are impacting global production.

That’s the type of supply and demand balance that should lead to even higher prices for coffee down the road. 

iPath Pure Beta Coffee ETN (CAFÉ)

CAFE has shown some promising gains with an 8.96% gain over the last week.  At a current price of $25.18, it’s now up 71.41% over the last year!

CAFÉ is an index comprised of a single exchange traded futures contract, except during the roll period when the Index may be comprised of two futures contracts. It has an expense ratio of 0.75%. 

This ETF has shown some volatility over the past year, but investors continue to buy.

And for good reason…

Coffee ETFs, such as CAFÉ, have become popular with investors who are looking to make money in a sometimes volatile commodity that has the ability to deliver large returns over short periods.

PowerShares Dynamic Food & Beverage Portfolio (PBJ)

PBJ is another Coffee related ETF. Its current price is $27.00 and has a YTD return of 2.51%. Clearly this hasn’t seen nearly as many gains as JO or CAFÉ in the past year. However, if you look at the ETF over the past five years, it has a return of 169.24%.

This ETF tracks an index of various U.S. food and beverage companies. The index is designed to provide capital appreciation through a variety of investment criteria, including fundamental growth, stock valuation, investment timeliness, and certain risk factors. 

Although this ETF is not coffee specific, it currently contains 31 stocks with several different coffee stocks including Starbucks (SBUX) and Green Mountain Coffee Roasters (GMCR).

It has an expense ratio of 0.60%.

Because PBJ is not a commodity in and of itself, and rather comprised of various individual stocks, we don’t see the same volatility as either JO or CAFÉ. This makes the ETF a better choice for long term investing with positive returns being seen over longer periods of time.

Here’s the lowdown…

There’s clearly a lot of momentum with these coffee ETFs.  These ETFs like JO, CAFE, and PBJ have been showing positive gains over time, and will certainly continue to show gains as long as the world continues their coffee habit.

Good Investing,

Corey Williams

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Category: Commodity ETFs, ETFs

About the Author ()

Corey Williams is the editor of Sector ETF Trader, an investment advisory service focused on profiting from ETFs and the economic cycle. Under Corey’s leadership, the Sector ETF Trader has become one of the most popular and successful ETF advisories around. In addition to his groundbreaking service, Corey is the lead contributor to ETF Trading Research, where he shares his insights about ETFs and financial markets three times a week. He’s also a regular contributor to the Dynamic Wealth Report and the editor of one the hottest option trading services around – Elite Option Trader.

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