BlackRock launches diversified commodities ETF
BlackRock has launched a new exchange traded fund (ETF) – the iShares Diversified Commodity Swap UCITS ETF (ICOM).
The US investment giant said that it has added the new fund with a remit to deliver exposure to 20 different commodities representing five sectors including: energy, agriculture, industrial metals, precious metals and livestock.
The fund seeks to replicate the performance of the Bloomberg Commodity USD Total Return Index, which aims to represent commodities that are of “importance and economic significance to the world economy”, while capping each sector at 33 per cent and each single commodity at 15 per cent, BlackRock said.
The fund uses unfunded total return swaps to achieve this exposure, which the company says is more operationally practical than holding physical commodities such as precious metals or livestock. The fund has a total expense ratio of 0.19%.
Fergus Slinger, co-head of iShares Sales EMEA, said: “Diversification is becoming more difficult to achieve due to increasing correlation between equities and bonds across global markets. This fund is a direct response to growing investor appetite for asset classes that offer stronger diversification impact in portfolios, and many are looking to commodities.
“By capping the single commodity and sector exposure in the fund, investors are not overexposed to a particular part of the market. It can therefore serve as an alternative to purchasing individual futures or investing directly in physical commodities.”