Global X ETFs has launched a commodities focused exchanged traded fund (ETF) offering exposure to sectors that underpin the growth of the global economy basing it upon an index developed by Bloomberg.
The Global X Bloomberg Commodity ETF (Synthetic), carrying the Australian Securities Exchange code of BCOM, will track the Bloomberg Commodity Index 3-Month Forward Excess Return and offer liquid exposure to hard and soft commodities with a low correlation to share and bond prices.
The ETF provider stated the commodities are grouped into six categories: energy, precious metals, industrial metals, livestock, grains and soft commodities such as coffee, cotton and sugar.
Global X head of investment strategy Blair Hannon said: “BCOM packages all these subcategories into one fund while capturing the performance of the entire commodities asset class for investors. Doing so can help reduce both market and idiosyncratic risks of individual commodities and avoids investors having to try to pick winners in a crowded field”.
“Commodities have historically exhibited low correlations with most assets Australians consider, such as property, shares and bonds. Investment in this asset class enhances the opportunity for investors to gain attractive risk-adjusted returns,” he added.
“Importantly, commodities function as a natural hedge against inflation; their prices tend to rise when inflation is rising. For this reason, commodities can add protective benefits to a portfolio as inflation continues to prove persistent.”
Bloomberg Asia Pacific head of indices Ji Zhuang revealed investors are seeking products with diversified exposure to hedge long-term macroeconomic risks and the BCOM index focused on market liquidity and diversification with capping mechanisms to preserve balances over time.
“In addition, the BCOM Forward indices offers investors a comprehensive set of exposures along the commodity curve, allowing ETF providers like Global X to customise their offering,” Zhang explained.
Global X now manages 33 ETFs in the Australian market with the launch of BCOM.
