USCF cuts fees on three ETFs

Aug 16th, 2019 | By | Category: ETF and Index News

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United States Commodity Funds (USCF) has implemented fee waivers on three of its ETFs including a broad commodity fund and two ETFs providing private equity-like returns.

USCF cuts fees across all three of its ETFs

The fee waivers will remain in place until at least 31 October 2020.

The fee waivers will remain in effect until at least 31 October 2020 and may be renewed with approval of the Board of Trustees of USCF ETF Trust.

While USCF manages a range of ten commodity ETPs (housing over $2.2 billion in assets under management across broad commodity, oil, natural gas, gasoline, and copper exposures), the firm’s ETFs have been unable to generate significant demand.

With total assets under management under $10 million across all three ETFs, the fee waivers may be a last-ditch attempt to stoke investors’ interest before USCF calls time on the funds.

Commodity

The USCF SummerHaven Dynamic Commodity Strategy No K-1 Fund (SDCI US) has reduced its expense ratio from 0.80% to 0.60%.

The fund, although technically actively managed, aims to provide returns that are broadly in line with the SummerHaven Dynamic Commodity Index. The index represents fully collateralized positions in 14 futures contracts, selected from a pool of 27 different commodities from six sectors: energy, precious metals, industrial metals, grains, livestock, and softs.

The methodology selects seven commodities exhibiting the highest degree of backwardation or the least degree of contango. The other seven chosen commodities are those with the highest price momentum over the previous twelve months, ensuring that each of the six commodity sectors is represented at least once in the final index.

Each contract is equally weighted by notional volume, and the portfolio of futures is reconstituted and rebalanced on a monthly basis.

The fund is registered under the Investment Company Act of 1940, rather than as a commodity partnership, which allows investors to skip the problematic K-1 tax form.

Private equity

The USCF SummerHaven Private Equity Strategy Index Fund (BUY US) has reduced its expense ratio from 0.95% to 0.80%.

The fund tracks the SummerHaven Private Equity Strategy Index which consists of mid-, small- and micro-cap publicly traded companies with similar characteristics to firms that have historically been acquired by private equity funds.

The methodology is based on the premise that the enterprise multiple (enterprise value (EV) divided by earnings before interest, tax, depreciation, and amortization (EBITDA)) is one of the key variables that private equity funds use to evaluate the attractiveness of a potential investment.

A low enterprise multiple indicates an attractive valuation, and this is what the index methodology systematically favours. Contrary to a direct investment in private equity, the index does not employ leverage and provides daily liquidity. The index is rebalanced annually.

Additionally, the USCF SummerHaven Private Equity Natural Resources Strategy Index Fund (BUYN US) has also reduced its expense ratio from 0.95% to 0.80%.

The fund tracks the SummerHaven Private Equity Natural Resources Strategy Index which uses the same methodology as the above index but only invests in companies involved in the production and use of natural resources.

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