Global X launches Commodity ETF

Global X ETFs has announced the launch of the Global X Bloomberg Commodity ETF (Synthetic) (BCOM) on the Australian Securities Exchange (ASX), which will offer exposure to “a well-diversified basket of commodities”.

The new exchange traded fund (ETF) will track the Bloomberg Commodity Index 3-Month Forward Excess Return and its broad-based basket of soft and hard commodities will include energy, grains, precious metals, metals, and livestock.

The firm’s head of investment strategy, Blair Hannon, stressed that commodities had historically low correlations with most assets Australians considered such as property, shares and bonds, and investment in this asset class enhanced the opportunity for investors to gain attractive risk-adjusted returns.

“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,” he said.

Generally, commodities fall into six categories: energy such as oil, gas, and diesel; precious metals such as gold, silver and platinum; industrial metals including copper and aluminium; livestock such as cattle; grains including wheat and soya beans; and soft commodities such as coffee, cotton and sugar.

“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,” Hannon added.

The new fund will also represent the 33rd ETF from Global X on the ASX and will add to the company’s suite of investor choices.