BlackRock to close iShares commodity optimized ETP

Aug 14th, 2018 | By | Category: Commodities

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BlackRock has announced that it will close and liquidate the iShares Commodity Optimized Trust (CMDT US).

ETF Closed closure

The last day of trading for the ETP will be 10 October 2018.

The NYSE Arca-listed ETP, which provides exposure to the performance of a broad basket of commodities, will have its last day of trading on 10 October 2018.

The product tracks the Bloomberg Roll Select Commodity Total Return Index which spans 20 different commodities covering agriculture, livestock, energy, precious metals and industrial metals.

Commodity futures included in the index are weighted by economic significance and market liquidity with select weighting restrictions on individual commodities and commodity groups to promote diversification.

The iShares product doesn’t actually invest directly in the commodities futures. Instead, it owns futures contracts on the Bloomberg Roll Select index.

The ETP was originally listed in August 2013 but currently has assets under management of less than $15 million, questioning its commercial viability.

Investors looking for a substitute vehicle may wish to consider the actively managed iShares Bloomberg Roll Select Commodity Strategy ETF (CMDY US) which seeks to maximize correlation with the same index underlying the closing fund.

CMDY is designed to simplify tax filings, as it does not require K-1 tax reporting. It has accumulated assets of $40m since its launch in April of this year and comes with an expense ratio of 0.28%.

Elsewhere, investors could take a look at the Invesco DB Commodity Index Tracking Fund (DBC US), which is the largest broad commodity ETP listed in the US.

This fund tracks the DBIQ Optimum Yield Diversified Commodity Index, composed of futures contracts on 14 of the most heavily traded and important physical commodities in the world. Exposure to commodities from the energy sector is capped at 60%.

It has $2.5 billion in assets but comes with a pricey expense ratio of 0.89%.

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