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First Trust enjoys commodities renaissance

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First Trust Advisors L.P. | Best Commodity ETF Issuer ($100m+)

The First Trust Global Tactical Commodity Strategy Fund (FTGC) is an actively managed exchange-traded fund that seeks total return and a relatively stable risk profile while providing investors with commodity exposure.

It was one of the first actively managed commodity ETFs to hit the market back in 2013, which put First Trust ahead of the pack, and has seen the fund double in size in the past year to reach USD4 billion in total net assets.

Ryan Issakainen, CFA, senior vice president and ETF strategist at First Trust, says that commodities are enjoying a renaissance with investors grappling with the ravages of rising inflation.

“The commodities asset class has been out of favour for quite some time, but over the last few years with inflation returning the asset class has become important again,” he says.

Issakainen says that historically commodities have had the potential to offer value to a portfolio thanks to their low/negative correlation to other asset classes, as well as their return potential.

“As the data continues to come in, we believe those speculators betting against commodities may be in for a rude awakening”.

At the end of October, First Trust’s assets under management hit USD190 billion with ETFs making up USD 129 billion. Having launched in 2006, First Trust is now the sixth largest ETF provider in the US based on total net assets, success that Issakainen attributes to their “long standing relationships with financial professionals”.

“We have become one of the sources that they look to for ETF innovation in particular,” he says.

Outside of commodities Issakainen says First Trust has seen growing interest in alternative assets.

“Investors are looking for ways outside of stocks and bonds to generate returns and manage risks. In our line-up, buffered ETFs have become very popular, where we are using options to manage your downside risk,” he says.

Looking to the coming year, Issakainen predicts ETFs will continue to serve an important role in filling the gaps in investor portfolios.

“Completion has been a big problem and people are trying to figure out how to deal with that by using ETFs. Commodities will continue to play a role in that in the year ahead as inflation stays high.”

He adds: “Beyond that, we are listening to our clients because that is our strategy for figuring out which asset class or product offering to focus on. We want to make sure that we are sensitive to where the demand is coming from and try to provide the best product possible in that space.” 

You should consider a fund’s investment objectives, risks, and charges and expenses carefully before investing. Contact First Trust Portfolios L.P. at 1-800-621 -1675 or visit ftportfolios.com to obtain a prospectus or summary prospectus which contains this and other information about a fund. The prospectus or summary prospectus should be read carefully before investing.

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