- World's first ETF on the Dow Jones-UBS Commodity Index 3 Month Forward
- New fund based on the top performing DJ-UBSCI F3(SM) Index which returned 263% over the past 10 years, making commodities the top performing major asset class over the period
- New fund provides high correlation with spot returns while reducing impact of roll yield
- New fund complements the existing ETC offering
- Trades and settles the same as an Equity on the London Stock Exchange
ETF Securities (ETFS) listed on Thursday 18th March the world first ETF based on the Dow Jones - UBS Commodity 3 Month Forward(SM) Index (DJ-UBSCI F3SM). The new fund will be part of the ETF Exchange (Europe) platform. ETF Exchange is the world's first 3rd generation ETF platform which is supported by Bank of America Merrill Lynch, Barclays Capital, Citi, and Rabobank International who are participants on the platform.
The increasing investor's knowledge about commodities investing and demand for exposure to longer-dated commodity futures contracts has led ETF Securities to create ETFX DJ-UBS All Commodities Forward 3 Month Fund (COMF), providing investors with more choice and allowing them to implement different investment strategies in commodities. Due to the dynamic nature of the commodity futures curve investors wish to be able to track different commodity futures dependent on their views.
ETFX DJ-UBS All Commodities Forward 3 Month Fund (COMF) offer investors for the first time, the opportunity to gain direct and simple exposure to a diversified basket of 19 forward commodity futures prices represented in the DJ-UBSCI F3(SM) Index, the index provide exposure to futures contracts three months ahead on the DJ-UBSCI(SM). The DJ-UBSCI F3(SM) is arguably the best way to gain commodity exposure with economic significance due to its unique two third weighting to liquidity and one third to production.
The new ETF offering is extremely complementary to the existing ETC offering, as it will broaden commodity investing to a wider range of investors across Europe. Together, the platform of ETCs and ETFs enable investors to implement a wide variety of investment strategies including physical, long, forward, leveraged and short exposure to all commodity sectors.
LSE Code | TER | |
ETFX DJ-UBS All Commodities 3 Month Forward Fund | COMF | 0.55% |
Research shows that the DJ-UBSCI F3(SM) historically exhibited high correlation with spot returns while reducing impact of roll yield, as the shape of the futures curves can vary widely over time and this can have an important impact on investor’s returns. The short end of the curve tends to be more strongly affected by contango/backwardation, whereas longer-dated futures are less affected and tend to be driven more by perceptions of long term structural supply, demand and cost issues which tend to change more slowly. Commodities were the best performing major asset class over the past 10 years to December 2009, with DJ-UBSCI F3SM Index rising by 263%, compared to a 2% rise in the EuroSTOXX 50, a 9% rise in the FTSE 100, a 7% rise in property(1) and 71% return on bonds(2). This outperformance was achieved with lower average annual volatility than equities over the same period(3).
Commenting on this innovative product launch, Mark Weeks, the CEO of ETF Exchange, said: "We continue to strive to deliver innovative solutions that meet the needs of our clients, and which challenge more traditional products. In the ETFX DJ-UBSCI F3, I believe we've achieved that"
Michael A. Petronella, President, Dow Jones Indexes, said: "As commodities investing has become more and more popular and diversified in the past years, market participants increasingly seek innovative indexing tools. The Dow Jones-UBS Commodity Forward Indexes provide superior and reliable performance measurement of longer-dated commodities futures contracts. We remain committed to deliver leading-edge indexing for this continuously evolving, exciting asset class."
Pietro Poletto, Head of ETFs and ETCs at London Stock Exchange Group, said: "We are pleased to welcome this new ETF to our markets today. Encompassing both the London Stock Exchange and Borsa Italiana, London Stock Exchange Group is the leading ETF exchange in Europe. This latest addition to the UK market will offer those trading on our London markets even greater diversity in their choice of investment."
(1) Property: Proxied by the UK EPRA Real Estate Index
(2) Bonds: Proxied by US Tracker 1-10Yrs Bond Index
(3) Calculated using the annual volatility of daily returns from 31st December 1999 to 31st December 2009