Commerzbank rolls out ETFs covering US Treasury and commodity markets

Oct 21st, 2015 | By | Category: Fixed Income

Commerzbank’s exchange-traded fund division Comstage has introduced five new ETFs to the Xetra and Borse Frankfurt exchanges. Four of the new funds track long or short positions for a range of maturities in the US Treasury market while the fifth tracks a basket of commodities from the energy, industrial and precious metal sectors.

Commerzbank roll out new ETFs covering US Treasury or commodity markets

The Commerzbank Tower, headquarters of Commerzbank, the financial giant behind the range of ComStage ETFs.

The ComStage CBK 10Y US-Treasury Future TR UCITS ETF (ETF 570) and the Comstage CBK 10Y US-Treasury Future Short TR UCITS ETF (ETF 571) provide exposure to the total return of a long or short position in the futures market for 10-year US Treasury bonds respectively. The long position profits when the yields on 10-year US Treasury bonds fall while the short position profits when the same yields rise. Both funds earn a separate return irrespective of the movements in 10-year yields, based on the interest earned on non-tied capital which is invested at the federal funds rate. Each fund has a total expense ratio (TER) of 0.20%.

The ComStage CBK US Treasury Bond Future Short TR UCITS ETF (ETF 572) and the ComStage CBK US Treasury Bond Future Double Short TR UCITS ETF (ETF 573) also follow the strategy of investing in short positions in the futures market for US Treasury bonds while the Double Short ETF provides a leveraged exposure by a factor of two. The government bonds underlying these contracts have specified maturities between 15-25 years; when the yields on these bonds rise, the total return to the funds increase. The TER for each fund is 0.20%.

All four of the new funds which track the US Treasury market do so through the use of futures markets. Several key benefits are obtained relative to direct investment: futures markets offer the opportunity to gain leveraged and short exposure if desired plus commission and execution costs are generally low.

The ComStage CBK Commodity ex-Agriculture Monthly EUR Hedged TR UCITS ETF (ETF 099) invests in a basket of commodity futures which cumulatively provide exposure to the energy sector, and the industrial and precious metal sectors. The fund trades in euros but employs a monthly currency hedge which largely offsets the risk of currency fluctuations against the US dollar. There is a TER of 0.35%.

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