ETF issuer WisdomTree has expanded its commodities UCITS product range with the launch of the WisdomTree Broad Commodities UCITS ETF (PCOM).
Listed today on the London Stock Exchange and Börse Xetra, PCOM seeks to track the performance of the Bloomberg Commodity Total Return Index, before fees and expenses, and has a management expense ratio of 0.19 per cent.
The index covers four broad commodity sectors: energy, agriculture, industrial metals, and precious metals. PCOM is innovative in that the precious metals exposure is delivered through physical replication of gold and silver. Total return swaps are used to deliver the performance for the energy, agriculture, and industrial metals components of the index.
Nitesh Shah, Head of Commodities & Macroeconomic Research, Europe, WisdomTree says: “Broad commodities have historically been one of the best hedges against inflation. Inflation in the US and Europe is running at the highest levels in over a decade, mainly driven by supply-side shocks, which commodities are uniquely positioned to protect against. Energy price spikes, drought-induced food price increases and transit bottlenecks, for example, feed directly into commodity prices and the consumption baskets that inflation figures are calculated from. It’s not just these short-term phenomena that are driving commodity prices. An infrastructure renaissance combined with an energy transition could drive a super-cycle in certain commodities for the coming decade.”
The firm writes that rather than being driven by micro-economic events affecting one commodity market or sector, the diversified commodity exposure of the Index potentially reduces volatility in comparison with non-diversified commodity investments.
Net flows into broad commodity ETPs globally stand at USD12 billion year to date, WisdomTree says. Gaining exposure to commodities has become an increasingly important feature in the current market environment as investors are becoming more aware of the role raw materials can play in navigating dynamic market conditions.
Alexis Marinof, Head of Europe, WisdomTree says: “This launch brings together our expertise in physically-backed products and leadership position in synthetic commodities ETPs – complementing our smart beta broad commodities UCITS solution. PCOM takes an innovative approach to delivering access to broad commodities by providing exposure to the spot price of precious metals. Commodities are at the heart of our European business, and we remain committed to providing investors with access to unique strategies that add value to their portfolios.”
WisdomTree offers the most comprehensive range of commodity ETPs in Europe, with circa USD24.5 billion in assets under management across its platform.
PCOM is registered for sale in Austria, Denmark, Finland, Germany, Italy, Luxembourg, Netherlands, Spain, Sweden and the UK.