10-Q: Commodity Funds Show Strong Gains in Q2 2026

United States Commodity Index Funds Trust reports robust performance for its USCI and CPER funds in the second quarter of 2026, driven by strong commodity futures markets.

Summary

• The United States Commodity Index Funds Trust (USCI) and United States Copper Index Fund (CPER) reported their financial results for the quarter ended June 30, 2026.
• USCI's Net Asset Value (NAV) per share increased by 19.29% for the six months ended June 30, 2026, reaching $92.44, while CPER's NAV per share increased by 8.35% to $37.75 over the same period.
• Commodity futures prices, particularly in Energy and Industrial Metals, showed strong upward trends, contributing significantly to the positive performance of the USCI fund.
• Copper futures also experienced a strong upward trend, with the SCI index returning 8.83% for the six months ended June 30, 2026, benefiting the CPER fund.
• Both funds maintained their investment objectives, with average daily NAV changes staying within the target range of +/- 10% of their respective benchmark indices.
• Total assets for the Trust reached $1,076,147,430 as of June 30, 2026.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this filing as moderately positive, reflecting strong performance in commodity futures, particularly energy and industrial metals, which benefited the USCI fund. The CPER fund also showed positive returns, though less pronounced. The overall market conditions for commodities appear favorable, supporting the funds' objectives.

Positives

• USCI fund experienced a 19.29% increase in NAV per share for the six months ended June 30, 2026, reaching $92.44.
• CPER fund experienced an 8.35% increase in NAV per share for the six months ended June 30, 2026, reaching $37.75.
• The SummerHaven Dynamic Commodity Index Total Return (SDCI) increased by 19.82% for the six months ended June 30, 2026, indicating strong performance in the broader commodity markets.
• Energy and Industrial Metals sectors showed significant gains, contributing to USCI's performance.
• Copper futures prices showed a strong upward trend, with the SummerHaven Copper Index (SCI) returning 8.83% for the six months ended June 30, 2026.
• Both funds successfully tracked their respective benchmark indices within the stated tolerance.
• Total assets for the Trust increased to $1,076,147,430 as of June 30, 2026, from $761,114,365 as of December 31, 2025.

Negatives

• USCI's actual total return of 19.29% underperformed its benchmark SDCI's hypothetical return of 19.82% by 0.51% for the six months ended June 30, 2026, primarily due to expenses.
• CPER's actual total return of 8.35% underperformed its benchmark SCI's hypothetical return of 8.83% by 0.48% for the six months ended June 30, 2026, primarily due to expenses.
• The change in unrealized loss on open commodity futures contracts for USCI was a loss of $14,106,177 for the three months ended June 30, 2026, compared to a loss of $3,645,834 in the prior year period.
• The change in unrealized loss on open commodity futures contracts for CPER was a loss of $1,487,395 as of June 30, 2026, compared to a gain of $52,247,472 as of December 31, 2025.

Risks

• Market volatility in commodities due to geopolitical conflicts, supply chain disruptions, and economic uncertainty can impact the value, pricing, and liquidity of investments.
• Interest rate risk may affect the value of fixed income securities held by the funds, and rising rates could lead to losses.
• Inflation can erode the value of cash and Treasury investments.
• The funds are subject to commodity price risk through their holdings of futures contracts.
• Counterparty credit risk exists for OTC swaps, although no such activities were undertaken in the reporting period.
• The performance of the funds is directly tied to the performance of their respective benchmark indices (SDCI for USCI, SCI for CPER), which are subject to market fluctuations.
• The funds' ability to track their benchmarks can be impacted by trading costs, management fees, brokerage commissions, and other expenses.

Future Outlook

The filing does not provide specific forward-looking guidance beyond the stated investment objectives of the funds. However, the positive performance in the first half of 2026 suggests continued focus on tracking commodity index performance, with potential for further gains if current market trends persist. The funds' ability to track their benchmarks is expected to continue, subject to market conditions and expenses.

Management Comments

• USCF believes that market arbitrage opportunities will cause the daily changes in the share price on the NYSE Arca to closely track the daily changes in the per share NAV.
• USCF believes that the net effect of the expected relationships between NAV and the indices will be that daily changes in share prices will closely track the daily changes in the indices, less expenses.
• The management anticipates that interest rates may continue to increase over the near future from historical lows, and that fees and expenses paid by each Trust Series may continue to be lower than interest earned, potentially allowing the funds to outperform their benchmarks.

Industry Context

StockSavvy.ai notes that the strong performance of the USCI fund aligns with a broader rally in commodities observed since 2020, driven by factors including rising inflation and supply/demand dynamics. The positive returns in energy and industrial metals reflect global economic activity and supply constraints. The CPER fund's performance is in line with copper market trends, which are influenced by industrial demand, particularly from China, and potential supply shortages.

Comparison to Industry Standards

• USCI's performance for the six months ended June 30, 2026 (19.29% NAV return) is compared to other diversified commodity indices: S&P GSCI (24.09%), Bloomberg Commodity Index (14.36%), and Deutsche Bank Liquid Commodity Index (19.39%). USCI's performance lagged the S&P GSCI and DBIQ OY indices but outperformed the BCOM index.
• CPER's performance for the six months ended June 30, 2026 (8.35% NAV return) is compared to the Bloomberg Copper Subindex Total Return (8.83%), showing a slight underperformance.
• Historically, over longer periods (e.g., since 1997), the SDCI has shown a higher annualized return (9.63%) and Sharpe ratio (0.39) compared to S&P GSCI (4.72% return, 0.15 Sharpe ratio) and DBIQ OY (5.99% return, 0.16 Sharpe ratio), but lower than BCOM TR (12.26% return, 0.64 Sharpe ratio).
• Similarly, the SCI has shown a higher annualized return (14.88%) and Sharpe ratio (0.51) compared to BCOM HG TR (12.95% return, 0.42 Sharpe ratio) and Spot Copper less storage costs (9.13% return, 0.29 Sharpe ratio) over the period since December 31, 1997.

Legal Proceedings

• Optimum Strategies Action: Dismissed with prejudice.
• SEC and CFTC Investigations: USCF and USO settled with SEC and CFTC, involving cease-and-desist orders and civil penalties totaling $2.5 million.
• In re: United States Oil Fund, LP Securities Litigation: Consolidated class action, amended complaint filed, motion to dismiss pending.
• Mehan Action: Derivative action stayed pending disposition of motions in the related securities litigation.
• In re United States Oil Fund, LP Derivative Litigation: Consolidated derivative actions stayed pending disposition of motions in the related securities litigation.

Related Party Transactions

• USCF, as sponsor, manages the Trust and its series, earning management fees.
• USCF also acts as general partner for Related Public Funds (USO, UNG, etc.).
• SummerHaven Index Management, LLC (SHIM) owns and maintains the SDCI and SCI indices.
• SummerHaven Investment Management, LLC acts as the trading advisor for the funds, earning advisory fees.
• ALPS Distributors, Inc. acts as the marketing agent, with fees borne by USCF.
• BNY Mellon provides custodial, administrative, and transfer agency services, with fees paid by USCF.

Stakeholder Impact

• Shareholders of USCI and CPER benefit from the positive returns driven by commodity market performance.
• The underperformance relative to benchmark indices due to expenses may negatively impact shareholder returns.
• The legal proceedings involving USO and USCF, while not directly impacting USCI/CPER's operations, could have reputational implications for the sponsor.
• The funds' investment strategy relies on futures contracts, which carry inherent market risks that could lead to losses for shareholders.

Next Steps

• Continue to manage portfolios to track the daily changes in percentage terms of the SummerHaven Dynamic Commodity Index Total Return (SDCI) for USCI and the SummerHaven Copper Index Total Return (SCI) for CPER, within a +/- 10% range.
• Monitor market conditions and commodity prices to adjust futures contract holdings as necessary.
• Continue to manage expenses to minimize tracking error relative to benchmark indices.

Key Dates

Recommendation

The funds have demonstrated solid performance in line with their commodity-focused objectives, benefiting from favorable market conditions in energy and metals. However, the slight underperformance against benchmarks due to expenses and the inherent volatility of commodity markets warrant a 'hold' recommendation. Investors seeking commodity exposure might find these funds suitable, but the lack of significant outperformance over benchmarks and the ongoing market risks suggest caution.

Keywords

Commodity Futures, Commodity Index, Copper Futures, Energy Commodities, Industrial Metals, SummerHaven Dynamic Commodity Index, SummerHaven Copper Index, Futures Contracts