ETF and ETP product sponsor WisdomTree has launched two new enhanced exchanged-traded commodities (ETCs) on the London Stock Exchange (LSE).
The Boost Enhanced Industrial Metals ETC and the Boost Enhanced Energy ETC incorporate 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, says: “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.
Rafi Aviav, Head of Product Development, says: “We are the leading provider of ETCs in Europe, with 31 per cent market share. We are committed to providing comprehensive solutions for investors and these new products add even more breadth to our commodity offering. We have an existing smart beta approach to broad commodity investments, and we are delighted to extend this approach to individual sectors, ensuring investors can tailor their portfolio to suit their needs.”
The Boost Enhanced Industrial Metals ETC tracks the Optimised Roll Industrial Metals Total Return Index and the 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 returns and lower risk relative to benchmark Bloomberg Commodity subindex (BCOM) returns.
