ETF Securities has listed an exchange-traded fund based on the Dow Jones UBS Commodity 3 Month Forward Index.
The fund, listed on the London Stock Exchange, will be part of the ETF Exchange (Europe) platform.
It aims to provide investors with more choice and allow them to implement different investment strategies in commodities.
Investors will gain direct exposure to a diversified basket of 19 forward commodity futures prices represented in the index.
Research shows that the index historically exhibited high correlation with spot returns while reducing impact of roll yield. 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 ten years to December 2009.
Mark Weeks, the chief executive of ETF Exchange, says: “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 of Dow Jones Indexes, adds: “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.”