ETF Securities listened to investors’ needs and responded by offering inexpensive, tax-efficient ETFs that deliver broad commodity exposure in a simplified and modernized product, according to Steven Dunn, executive director and head of U.S. distribution.
“We do feel that some people walked away from the asset class from an investment standpoint. We think some people walked away because they just didn’t have a good vehicle to do that,” Dunn told ThinkAdvisor.
ETF Securities wanted to change that. So, it launched a suite of commodity ETFs — ETFS Bloomberg All Commodity Strategy K-1 Free ETF (BCI), ETFS Bloomberg All Commodity Longer Dated Strategy K-1 Free ETF (BCD) and ETFS Bloomberg Energy Commodity Longer Dated Strategy K-1 Free ETF (BEF) — that are the lowest cost diversified commodity ETFs in the U.S.
“I don’t know if because the asset class fell a little bit sleepy during ‘13, ‘14, ‘15 when people weren’t particularly interested that it just didn’t get swept up in this fee compression aspect,” Dunn told ThinkAdvisor. “So what you have is a number of products out there that – to be quite honest – aren’t particularly priced attractively.”
The average expense ratio in the commodity space, looking at broad-based commodities, is probably high-70s, low-80s basis points, according to Dunn. ETF Securities is bringing to market two products (BCI and BCD) that are 29 basis points and a third (BEF) that is 39 basis points.
The new ETFs also take away the cumbersome K-1 tax form filing requirements by relying on a ’40 Act structure.
“Typically K-1s don’t have to be issued until after most people already file their taxes and so if you have a product that issues a K-1, you may have to file for an extension which is a hassle,” Dunn said. “People don’t like to do it.”
The ETFs will track the Bloomberg Commodity Indices (BCOM), a family of liquid and diversified indices giving investors access to global commodities. “Bloomberg is by far the ‘benchmark of choice’ within the commodity space. It is the most diversified basket of commodities that are out there,” Dunn said.
BCOM covers 22 commodity contracts whose weightings are based on their liquidity, production value and economic significance. The benchmark sets a cap on sector exposure at 33%, meaning the allocation to energy is less than that of other indexes, creating a more diversified investor experience.
ProShares Launches 3x and -3x Crude Oil ETFs
ProShares launched daily 3x leveraged and inverse crude oil ETFs. ProShares UltraPro 3x Crude Oil ETF (OILU) and ProShares UltraPro 3x Short Crude Oil ETF (OILD) are benchmarked to the Bloomberg WTI Crude Oil SubindexSM. OILU and OILD are listed on NYSE Arca.
New Direxion ETF Provides Tactical Exposure to Commodity Markets
Direxion added the Direxion Auspice Broad Commodity Strategy ETF (COM), which seeks to provide total return that exceeds that of the Auspice Broad Commodity Index.
The rules-based index attempts to capture trends in 12 diversified commodity markets using a quantitative methodology and offers an easier, more adaptive way to diversify with commodities.
FS Investments Launches FS Energy Total Return Fund
FS Investments launched its first closed-end interval fund, FS Energy Total Return Fund.
The fund seeks to generate an attractive total return consisting of current income and capital appreciation by investing in the equity and debt securities of both public and private energy and energy infrastructure companies.
JVB Financial to Offer a New Form of Defined Outcome UIT Developed by Olden Lane
J.V.B. Financial Group, LLC partnered with Olden Lane Securities LLC to launch a new series of unit investment trusts (UITs) called Target Outcome Funds.
Target Outcome Funds are a new category of UITs developed by Olden Lane and designed to offer a liquid, transparent and cost-effective vehicle for outcome-driven returns.
The first series, offered by JVB Financial, is titled “Capped Performance Portfolio with Buffer Protection Linked to the SPDR® S&P 500® ETF Trust” and seeks leveraged capital appreciation based on the three year price performance of the SPDR S&P 500 ETF Trust. The Trust’s return will be subject to a cap of 25% and will seek to provide protection against the first 15% of any decline in the price of the reference fund, in each case before fees and expenses.
–Read last week’s round up here: Active Alts Launches Active Alts Contrarian ETF: Portfolio Products