abrdn is building on its range of commodities ETFs with the launch of a new fund that will track an index of industrial metal prices.
The abrdn Bloomberg Industrial Metals Strategy K-1 Free ETF will seek to provide investment results that closely correspond, before fees and expenses, to the performance of the Bloomberg Industrial Metals Total Return SubindexSM. The Index consists of four commodities futures contracts with respect to aluminum, copper, nickel and zinc.
abrdn head of ETFs Steve Dunn comments: “The world is at the early stages of a huge energy transition away from fossil fuels into more sustainable sources. Almost every renewable energy system uses large amounts of industrial metals, including electric vehicles, wind turbines, solar panels, grid level batteries and carbon capture systems. That huge, long term structural demand will drive significant new demand for industrial metals, a trend that this ETF opens investors up to.”
It is the first product to be launched in the US under the new abrdn brand and forms part of the region’s growth plans. Those growth plans are centered on growing in the client solutions, passive alternatives, private markets and specialty equity spaces; while continuing to distribute a focused range of products manufactured outside the region, and generating high quality investment research on Americas markets for products managed elsewhere in the company’s network.
The firm writes that the new product will join the trend of ‘K-1 Free’ commodities ETFs, which do not issue K-1 tax forms that have historically disincentivised clients from investing in the space. abrdn was amongst the pioneers of this trend, with abrdn Bloomberg All Commodity Strategy K-1 Free ETF (BCI) The launch also comes after a period of significant growth for abrdn’s ETF franchise which has gone from managing around USD3 billion on behalf of clients three years ago to USD6.9 billion as of September 2021. Three of the five previous metal ETFs in the range have crossed the USD1 billion asset under management milestone.
Commenting on the region’s growth strategy, CEO for Americas Chris Demetriou, says: “I’m pleased that we’re launching this new product at a time when demand for industrial metals is only set to grow and investors are looking for non-correlated investments to act as a hedge against inflation and other market risks. Our strategy in the region revolves in part around competing in those areas where our experience and expertise gives us an advantage. This extension to our commodities franchise reflects that strategy. Our ETF AUM has more than doubled in the last three years to reach nearly USD7 billion today.”