BlackRock’s exchange traded funds platform iShares has today (23 January) announced the expansion of its commodity range with the launch of four new exchange-traded funds.
The products track the latest generation of S&P GSCI indices and offer exposure to agriculture, energy, industrial metals and the broad commodity market.
The iShares S&P GSCI Dynamic Roll Agriculture Swap, iShares S&P GSCI Dynamic Roll Energy Swap, iShares S&P GSCI Dynamic Roll Industrial Metals Swap and iShares S&P GSCI Dynamic Roll Commodity Swap ETFs were listed on the London Stock Exchange today.
The four ETFs manage counterparty exposure through collateralisation of up to 120 per cent on a daily basis, using what the firm described as ‘high-quality’ collateral.
Axel Lomholt, head of iShares product development EMEA, said: “We have seen sustained interest from professional investors for new commodity exposures, driven by a desire to diversify their portfolios.
“To meet this demand, we have extended our commodity range with new exposures, delivered in a highly transparent, risk-managed and regulated Ucits structure.
“These new products are the latest step in our efforts to bring new levels of disclosure, transparency and risk management to the ETF sector.
“They are based on iShares unique multi-counterparty swap platform and set a standard for the quality and level of collateralisation that we believe can help improve the marketplace for ETFs.”
Mr Lombolt said the return from futures-based commodity indices can be adversely impacted when markets are in contango, where the cost of a commodity for longer dated delivery is greater than that for shorter dated delivery.
The S&P GSCI Dynamic Roll indices seek to mitigate the effects of contango by employing a dynamic selection strategy when rolling futures positions.
