Exchange-traded commodities pioneer ETF Securities is to list 29 new ETCs on the London Stock Exchange that offer investors the opportunity to gain direct and simple exposure to commodity
Exchange-traded commodities pioneer ETF Securities is to list 29 new ETCs on the London Stock Exchange that offer investors the opportunity to gain direct and simple exposure to commodity futures prices linked to a platform of forward commodity indices, the Dow Jones-AIG Commodity 3 Month Forward Indices.
The new ETCs will track 29 different individual commodities and baskets of commodities and offer two different maturities. In total up to 58 ETCs will track both the Dow Jones-AIG Commodity Index and the DJ-AIGCI 3 Month Forward Indices, which are being launched for the first time by Dow Jones and AIG Financial Products.
The first ETCs to track DJ-AIG commodity indices were listed on the London exchange in September 2006. Since then, the existing 29 ETCs tracking DJ-AIG indices have accumulated over USD1bn in assets.
The most popular ETCs have been those tracking precious metals and agriculture, which account for 70 per cent of ETC assets and track the existing DJ-AIG indices. Over the past 12 months, the ETCs have been listed on five European stock exchanges comprising London, Deutsche Börse, Euronext Paris, Euronext Amsterdam and Borsa Italiana.
ETF Securities says the creation of the forward ETCs has been prompted by demand from investors for access to different parts of the commodity futures curve. The new ETCs have historically shown lower volatility, while the effects of contango and backwardation also vary between the existing and new ETCs.
‘ETCs have now been available in Europe since December 2003 and their simplicity and structure have now been embraced by the market,’ says ETF Securities chairman Graham Tuckwell. ‘Many investors have approached us showing an appetite for ETCs priced off a range of commodities futures. Increased investor demand and knowledge has resulted in investors wanting access to more choice and alternative trading and investment strategies.’
‘Overall there has been a huge surge in global demand for ETCs, and we recently passed the landmark of USD1.5bn invested in our existing offering of 42 ETCs. With the new range of forward ETCs, ETF Securities is continuing its leadership of the ETC market, having delivered platforms of five physically-backed precious metal ETCs, eight oil ETCs backed by Shell and 29 commodity ETCs on five major European stock exchanges.’
The management of ETF Securities pioneered the development of ETCs, with the world’s first listing of an ETC, Gold Bullion Securities, in Australia and London in 2003, followed by the listing of the world’s first complete ETC platform in London in September 2006.
