WisdomTree has launched two new enhanced exchanged-traded commodities (ETCs). Boost Enhanced Industrial Metals ETC and Boost Enhanced Energy ETC listed on the London Stock Exchange today.
Each of the new products incorporates a tried and tested optimised roll mechanism which aims to minimise the potential losses arising from commodity future contracts in contango or to maximise the benefit from contracts in backwardation.
Christopher Gannatti, head of Research in Europe, said, "The roll in these ETCs substantially mitigates the costs of holding commodity futures contracts and this can potentially reduce the volatility of returns. This removes one of the main barriers to having a long-term allocation to commodities."
"We have a constructive view on both industrial metals and energy, in particular oil. As a result of Organization for Petroleum Exporting Countries (OPEC) policy, oil supply is currently declining, helping to lift prices. Most industrial metals are in a supply deficit and we believe that once the fog of trade concerns lifts, metals will be able to trade on their own fundamentals and shake off the negative sentiment that has recently held down the asset class," he continued.
Boost Enhanced Industrial Metals ETC tracks the Optimised Roll Industrial Metals Total Return index and Boost Enhanced Energy ETC tracks the Optimised Roll Energy Total Return index. Each index incorporates a smart roll mechanism, based on the S&P GSCI Dynamic Roll indices, that aims to deliver curve enhanced returns. The results of the enhanced roll strategy are evident from the consistently higher returns2 and lower risk relative to benchmark Bloomberg Commodity subindex (BCOM) returns.