Company Overview

Invesco DB Base Metals Fund is a commodity pool that trades futures contracts in aluminum, copper, and zinc with the goal of tracking the DBIQ Optimum Yield Industrial Metals Index. The Fund was formed in 2006 and is managed by Invesco Capital Management LLC.

The Fund has returned -1.86% over the past three months based on its net asset value (NAV). This was driven by falling aluminum and zinc futures prices, partially offset by rising copper futures. The Fund’s market price per share has decreased from $18.31 to $17.95 over the quarter.

Revenue and Profit Analysis

The Fund had a net loss of $2.2 million over the past three months. This loss was caused by:

• $1.6 million in interest/dividend income
• $(0.1) million in net realized trading losses
• $(3.5) million in unrealized losses on futures positions
  
• $0.2 million in operating expenses

The unrealized trading losses show that the Fund’s open futures positions have declined in value over the quarter. However, the Fund aims to track its benchmark index rather than generate profits.

Fund Operations

The Fund operates by trading futures contracts on aluminum, copper, and zinc. The total value of the Fund’s futures positions is set to match the Fund’s net asset value rather than the benchmark index value.

The Fund holds a portfolio of Treasury bonds and money market funds to use as collateral for its futures trading. The Fund’s cash flows during the quarter were driven by:

• $3.5 million from share purchases by investors
• $4.4 million paid for share redemptions
• $6 million received from Treasury bond sales

Market Outlook

Industrial metal prices have seen mixed performance so far in 2024. Copper has risen due to tight supplies and expanded smelting capacity in China. However, aluminum and zinc remain under pressure from weak demand in China’s real estate sector.

Going forward, metal prices will likely continue to be volatile given uncertainties around Chinese demand and the potential for further supply disruptions from the conflict in Ukraine. However, the Fund will continue working to track its benchmark index through futures trading strategies.