ETF Securities, independent providers of Exchange Traded Products (ETPs), launched two new broad commodity ETFs on the London Stock Exchange, tracking two indices from the Bloomberg Commodity Index family.
Net flows into commodity ETPs in Europe stand at $6.3bn to date. Gaining exposure to commodities has become increasingly important as investors become more familiar with the role of raw materials in supporting global growth. Commodities tend to have a positive correlation with inflation which can be attractive to certain investors. During periods of high inflation and equity market downturns, commodities have historically outperformed most other asset classes and provided some protection against downside macroeconomic risks.
“Knowledge of the longer-term benefits as well as the understanding of uncorrelated risk contribution by this asset class has increased. With the demand for a well-diversified commodities exposure continuing to grow, we are focused on providing investors with a wider range of broad commodities solutions with a particular focus on efficient transaction costs to help reduce the cost of investing in this asset class,” says Howie Li, CEO of Canvas, ETF Securities.
The two new ETFs are designed for investors who want ‘all-in-one’ access to commodities for growth and diversification, but who wish to avoid the challenges of navigating several sub-sectors themselves via futures.
The two new ETFs are:
– ETFs all commodities GO Ucits ETF, which tracks an index of front month commodity futures and may be used as a tactical play, a core diversifier or part of an allocation to an alternatives portfolio.
– ETFs longer dated all commodities ex-agriculture and livestock GO Ucits ETF, which tracks an index of longer-dated commodity futures on energy and metals and is likely to appeal to investors seeking broad commodity exposure without an allocation to food-related commodities.