UBS commodities ETF surpasses $1 billion in AUM

Mar 16th, 2017 | By | Category: Commodities

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UBS Asset Management has announced that the UBS CMCI Composite SF UCITS ETF (LON: UC14) has surpassed $1 billion in assets under management driven by a surge in net new money of $224 million between 1 January and 13 March 2017.

UBS commodities ETF surpasses $1 billion in AUM

The UBS CMCI Composite SF UCITS ETF provides exposure to a basket of more than 25 commodities across the energy, precious metals, industrial metals, agriculture, and livestock sectors.

According to UBS, inflows into the ETF gained momentum over the last six months as investors sought to protect portfolios from an increasingly inflationary environment.

Clemens Reuter, Global Head of Investment Specialists Passive & ETFs, commented: “There is definitely growing interest from investors in increasing exposure to commodities for their asset allocation strategies and portfolios. In particular, we are seeing demand from European pension funds, alongside asset managers, who have invested extensively in the product.

Contributing to the milestone achievement was the strong performance of the commodities sector with the ETF delivering a return of more than 16% in 2016.

The ETF tracks the UBS Bloomberg CMCI Composite TR Index, providing exposure to a basket of more than 25 commodities across the energy, precious metals, industrial metals, agriculture, and livestock sectors. The strategy involves holding futures contracts across the maturity curve, from three months to three years, and does so using a constant maturity rolling process which seeks to mitigate the effects of negative roll yield.

“We expect to see more pension fund consultants recommending the CMCI ETF to their end-clients due to its advanced rolling methodology and its excellent diversification characteristics,” added Reuter. “In addition, our recently launched ex-Agriculture version has also seen rapid asset growth from those investors seeking SRI as a theme to add to their commodities exposure.”

The weightings of the index are designed to reflect the economic significance and market liquidity of each commodity. As of 28 February 2017, the index’s largest sector exposure is energy (34.2%), followed by agriculture (29.2%), industrial metals (26.8%), precious metals (5.4%) and livestock (4.4%). The largest commodity exposures are Brent crude oil (10.0%), light crude oil (9.2%), copper (9.1%), aluminium (6.8%), and soybeans (6.4%).

The ETF is available in both US dollar and currency-hedged shares classes (EUR, CHF and GBP).

It has a total expense ratio of 0.37%.

The revival in demand for commodities exposure was not only reflected in the UBS ETF; despite only launching in January of this year, the Source Bloomberg Commodity UCITS ETF (LON: CMOD) has accumulated over $1.1bn in AUM. The fund tracks the well-known Bloomberg Commodity Index, offering exposure to over 20 different commodities at a total cost of 0.40% per annum (ongoing charges of 0.19% and swap fee of 0.21%).

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