Last year was the time of exchange-traded commodity funds, ranging from oil and gold to wheat, corn, and basic building metals. Just one year later, exchange-traded funds have grown tremendously to take a foothold in the actively-managed space.

Of the handful of firms entering the actively-managed scene, very few are expecting immediate success. Considering that actively managed ETFs lack the history of mutual funds, Ed McRedmond from ProShares told the Wall Street Journal that securing the attention of investors would require education about the inherent benefits of low fees and taxes associated with exchange-traded funds.

Another hurdle stands in the way of actively-managed ETFs gaining tremendous popularity. The SEC requires all funds to update their current positions each and every day, a situation that many stock-pickers dislike as it allows renegade traders to “front-run” the trades of the ETF. Mutual funds, in contrast, only report their holdings two to four times per year.

Investors’ appetite for commodities continues to grow as a hedge against government action to repair the ailing economy. Some investors are bracing for an inflation-led recovery by diversifying with the Powershares DB Commodity Index Tracking Fund ETF (DBC: Quote, Profile, Advanced Chart, News).

Reuters reports that after rising to nearly $21 per share, DBC options saw increased volume, with a strike price of $21 per share for a cost of $.80 per contract. Chris McKhann from OptionMonster.com commented that the change in price and volume is indicative of investor demand stemming from a newsletter service, as the majority of the transactions were “retail” trades.

The fund is nearly perfect for an inflation hedge, as it tracks the change in the prices of crude oil, heating oil, aluminum, gold, corn and wheat.

After flourishing earlier in the year, commodity ETFs have struggled immensely amid market indecision. While many investors enjoyed solid growth during the beginning of 2008, many of these price values have since plummeted. A couple of examples of this downturn include oil and corn. Mark Jewell of the Associated Press points out that oil doubled in value over a year’s time, yet since July the commodity slipped approximately 70%. United States Oil ETF (USO: Quote, Profile, Advanced Chart, News) captures this volatile price action. Another example of this commodity weakness is found in corn. The commodity was trading at approximately $8 per bushel over the summer, however, has fallen to around $3.30 currently.

State Street Global Advisors (SSgA), a major issuer of ETFs, has carved out statistics of commodity ETFs in the market. SSgA reports that there is approximately $26 billion invested among 22 commodity ETFs on U.S. exchanges, which makes up only about 5% of all ETF assets. The chart below illustrates the broad commodity industry through iShares S&P GSCI Commodity-Indexed Trust (GSG: Quote, Profile, Advanced Chart, News). Associated Press relays that GSG has dropped more than 60% since reaching a high this past summer. The latest price of the ETF is under $30 per share and is at all-time low.

ETF Securities has released figures from the first half of the year, and it is clear that exchange-traded commodities (ETCs) have performed exceptionally well when compared to equity funds. The outstanding performance in commodities did not go unrecognized. The Finance Week article reports that in the first half of 2008, ETF Securities ETC assets grew by 152% to $6.3 billion. It is easy to understand the growing popularity in these investment vehicles, especially when sixteen types of ETCs grew by more than 50% during the six-month time frame, according to Gerry OKane of Finance Week. These hottest commodities have been natural gas, oil, corn, and energy. The natural gas ETC lead the way with an incredible boost of 72.7%. Finance Week explains that when you compare the overall performance of commodities to equity funds, such as the S&P 500, commodities have done at least 40% better in the first six months of the year. With a direct example, ETFS All Commodities DJ-AIGCISM ETC increased by nearly 27% during the first half of the year while the S&P 500 dropped almost 12% in that time.

Despite the S&P 500 Index being down nearly 12% so far in 2008, investors looking to remain long with their position in the current market should look no further than the agricultural industry. The returns for the month of June alone have shown tremendous strength. An article from The Street identifies six ETNs that have not only gained more than 11% so far this year but more than 10% in June. The two newest ETNs, introduced this past February, are known as ELEMENTS MLCX Grains Index Total Return ETN (GRU) and Opta LB Commodity Index Pure Beta ETN (EOH). GRU tracks an index with various commodities such as corn, soybeans, soy meals and wheat, while EOH focuses on commodities like coffee, sugar, cocoa, and various grains. Both of these relatively new ETNs produced the leading returns for the month with more than 17% growth each. One other ETN from the industry was able to reach an increase of 17% in June, noted Richard Widows of The Street. This ETN is known as iPath DJ AIG Grains Total Return ETN (JJG) and concentrates on grains.

Of the six mentioned agriculture ETNs, PowerShares DB Agriculture Fund (DBA) is considered the oldest, with an inception of January 2007. DBA has a grade of A+ from The Street and returned more than 15% for the month. DBA is made up of corn, wheat, soybeans, and sugar commodities. The last two ETNs, iPath DJ AIG Agriculture Total Return Sub-Index ETN (JJA) and ELEMENTS RIC Index Agriculture Total Return Trust (RJA), grew in June by 14.96% and 10.46%, respectively.