An exchange-traded fund is an investment fund that that tracks indexes or assets like stocks, commodities or bonds. They have become increasingly popular with retail investors—mainly because they offer exposure to assets classes like commodities that are otherwise difficult for non-institutional investors to tap.
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U.S. listed energy-related commodities ETFs pulled in $1.2 billion of assets between March 1 and March 20, with inflows occurring on all but five trading days, according to TrimTabs Investment Research.
This was despite a 7.2 percent price plunge during that period.
"Investors keep piling into commodities ETFs even though their performance has been terrible. How steep will losses have to get before investors start selling?" said TrimTabs CEO David Santschi, Chief Executive Officer in a research note out Tuesday.
"From a contrarian perspective, persistent bottom fishing in an asset class, that is selling off hard, points to lower prices. We advise steering clear of commodities, particularly oil and natural gas," he later added.
The price of Brent crude oil has fallen by around 10 percent this month, while light crude is down by just under 3 percent. This continues a steep slump that started last June and has seen oil prices fall by around 50 percent.
Shah forecast oil prices could go back down to around $40 and stabilize there.