UBS unveils currency-hedged commodities ETF

Mar 10th, 2015 | By | Category: Commodities

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UBS Global Asset Management has expanded its line-up of currency-hedged exchange-traded funds with the launch of the UBS ETF (IE) CMCI Composite hedged GBP SF UCITS ETF (UC90).

UBS unveils currency-hedged commodities ETF

UBS Global Asset Management has introduced a currency-hedged broad commodities ETF on the London Stock Exchange.

Listed on the London Stock Exchange, the ETF offers investors access to commodities markets with GBP currency hedging and will likely appeal to UK-based investors wishing to diversify their investments while neutralising currency risks.

The fund is linked to the Bloomberg CMCI Composite Total Return GBP-hedged index, a second-generation index which extends beyond use of short-dated futures contracts and diversifies investment across the maturity curve. The index is diversified across 26 commodities and five maturities.

By providing investors with access to ‘constant maturities‘, the index not only gives a more continuous exposure to the asset class and avoids the speculative activity that can surround monthly rolls of traditional indices, it also helps to mitigate negative roll yield, making the index more representative of the underlying market price movements and more efficient as a result.

The in-built currency hedge mitigates against adverse currency movements which can have a major impact on the performance of an investment thus potentially negating returns.

Compared against the Bloomberg Commodities Index (BCOM), the CMCI has outperformed by 4.4% on an annualized excess return basis since inception in January 2007. It has also delivered stronger returns than many other indices with lower levels of volatility (17.2% p.a.)

UBS offers more than 50 currency hedged ETFs, making it the largest provider of currency-hedged ETFs in Europe.

The fund has a total expense ratio (TER) of 0.45%.

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