For investors looking to avoid underperformance, iPath Pure Beta Cocoa ETN (CHOC - Free Report) is probably on radar now. The fund just touched a 52-week low and CHOC is down nearly 30.1% from its 52-week high price of $47.69/share.
But is more pain in store for this ETF? Let’s take a quick look at the fund and the near-term outlook on it to get a better idea on where it might be headed:
CHOC in Focus
CHOC tracks the Barclays Cocoa Pure Beta Index. CHOC charges investors 75 basis points a year in fees. This product has an AUM of $3.3 million. It exchanges about 2,500 shares a day (see all Agricultural ETFs here).
Why the Move?
Cocoa ETF has been slumping due to a bearish supply outlook. Top cocoa producer Ivory Coast is planning to increase the supply of the commodity. Meanwhile, exports from Indonesian island Sulawesi more than doubled in November. At the start of the new crop season, there were worries about lower yield in the mid-crop season owing to prolonged dry weather in Ivory Coast. However, contrary to the fears, the season witnessed impressive production
More Pain Ahead?
Currently, CHOC has a Zacks ETF Rank of 5 or ‘Strong Sell’ rating with a High risk outlook, suggesting its continued underperformance in the coming months. Investors should therefore exercise caution and wait until the sector bottoms out before jumping into this ETF.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>