WisdomTree introduces CHF-hedging for roll-enhanced commodity ETF

Dec 16th, 2019 | By | Category: Commodities

ETF STRATEGY NEWS! ETF Strategy is delighted to announce the launch of ETF Strategy Hub (hub.etfstrategy.com), an on-demand repository of webcasts, videos, podcasts and white papers. Debuting with Special Series on Technology & Innovation in China and the Digital Economy.


WisdomTree has introduced a new currency-hedged share class for the WisdomTree Enhanced Commodity UCITS ETF on SIX Swiss Exchange.

WisdomTree introduces CHF-hedging for roll-enhanced commodity ETF

The new share class mitigates currency risk between the underlying US dollar-denominated commodity futures contracts and the Swiss franc.

The share class, which trades under the ticker COMS SW, mitigates currency risk between the underlying US dollar-denominated commodity futures contracts and the Swiss franc.

Initially launched in May 2016, the ETF features a mechanism that helps reduce the costs of holding commodity futures contracts, meaning investors can hold the ETF in their portfolios for longer.

The fund tracks the Optimised Roll Commodity Total Return Index, a broadly diversified index with weightings based on the widely followed Bloomberg Commodity Index.

The index consists of 22 commodities with current sector exposures of 33.4% in agriculture, 31.8% in energy, 17.5% in precious metals, and 17.3% in industrial metals.

The index incorporates a smart roll mechanism which looks to mitigate negative roll yield.

Commodity futures contracts trade either in contango, where forward month futures contracts cost more than the current month (leading to negative roll yield) or in backwardation, where forward month futures contracts trade at a discount to the current month (leading to positive roll yield). It is usually the supply/demand factor that determines whether the commodity is in contango or backwardation.

The index’s rules-based dynamic approach to rolling futures contracts aims to minimize contango and maximize backwardation.

The fund gets its commodities exposure through an unfunded total return swap. It invests in and physically holds US T-bills and any swap exposure is over-collateralized and reset on a monthly basis.

The ETF is also available in a GBP-hedged share class listed on London Stock Exchange (Ticker: WCOM LN) and a EUR-hedged share class on SIX (WCOE SW), Xetra (WTEH GY) and Borsa Italiana (WCOE IM).

The unhedged version of the ETF trades on SIX in US dollars (WCOG SW), LSE in pound sterling (WCOB LN) and US dollars (WCOA LN), and on Xetra (WTIC GY) and Borsa Italiana (WCOA IM) in euros.

Both the hedged and unhedged share classes of the fund come with total expense ratios (TERs) of 0.35%. The ETF has accumulated approximately $320 million in assets under management across all share classes.

Tags: , , , , , , , , ,

Leave a Comment