The iShares Diversified Commodity Swap UCITS ETF replicates the Bloomberg Commodity USD Total Return index, the company announced in a statement.
The index aims to represent commodities that are of importance and economic significance to the world economy while capping each sector at 33% and each single commodity at 15%.
By replicating it, the ETF will gain exposure to a basket of 20 stocks across five sectors; energy, agriculture, industrial metals, precious metals and livestock.
The fund will use total return swaps to achieve this exposure, instead of being physically backed – a strategy that is “more practical with commodities such as precious metals or livestock”, BlackRock motivated.
Achieve diversification
Commenting on the launch, the company said the fund was designed as a direct response to growing investor appetite for asset classes offering stronger diversification in a global investment landscape weighted down by the increasing correlation between equities and bonds.
“By capping the single commodity and sector exposure in the fund, investors are not overexposed to a particular part of the market. It can, therefore, serve as an alternative to purchasing individual futures or investing directly in physical commodities,” said Fergus Slinger, co-head of sales for the Europe, the Middle East and Africa region at iShares.
The fund is available in Austria, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Norway, Spain, Sweden and the UK.
