ETF Securities Ltd is set to shatter investment records with the simultaneous launch of 29 separate ETCs in the UK, comprising 19 individual securities and 10 index securities.
ETF Securities Ltd is set to shatter investment records with the simultaneous launch of 29 separate ETCs in the UK, comprising 19 individual securities and 10 index securities.
The historic launch will boost the number of existing ETFs and similar type securities in the UK to double what is currently available and give investors access to a comprehensive range of individual commodity securities for the first time, along with a comprehensive range of commodity index securities.
Graham Tuckwell, Chairman of ETF Securities, said: ‘Since launching the first ETC more than 3 years ago, we have seen huge demand for new products. This has lowered many of the barriers that previously prevented many investors from investing in the commodities market, including access, trading and operational risks, custody and transaction costs. Globally more than USD 80 billion has been invested in commodity indices. And following the success of the first two securities – Gold Bullion Securities and ETFS Oil Securities – we decided the time was right to make the broadest possible range of commodities available to the investing public. With the launch of a record-breaking 29 new securities, we are enabling investors to tap into the ever-increasing appetite for commodities and to trade easily and cheaply on a single platform. Regular investors wanting to invest in the commodities market have previously had limited choice when trying to gain commodity exposure without exposing themselves to corporate and operational risks.
‘Commodities used to be considered an ‘alternative’ investment but due to the development of global capital markets and new financial products like ours, that provide simple market access, commodities are becoming widely accepted as a mainstream asset class. While some commodities can be volatile, it is the correlation between different securities and different asset classes which can increase portfolio diversification and decrease portfolio risk, particularly when the correlation is negative or very low. It is also a particularly exciting time for commodities, with world-wide demand growing fast, particularly in China and India, and this is a trend we see continuing.’
The 19 separate classes of commodity securities to be listed are:
ETFS Aluminium
ETFS Coffee
ETFS Copper
ETFS Corn
ETFS Cotton
ETFS Crude Oil
ETFS Gasoline
ETFS Gold
ETFS Heating Oil
ETFS Lean Hogs
ETFS Live Cattle
ETFS Natural Gas
ETFS Nickel
ETFS Silver
ETFS Soybean Oil
ETFS Soybeans
ETFS Sugar
ETFS Wheat
ETFS Zinc
The 10 baskets of commodities to be listed are:
ETFS All Commodities DJ-AIGCISM
ETFS Agriculture DJ-AIGCISM
ETFS Energy DJ-AIGCISM
ETFS Ex-Energy DJ-AIGCISM
ETFS Grains DJ-AIGCISM
ETFS Industrial Metals DJ-AIGCISM
ETFS Livestock DJ-AIGCISM
ETFS Petroleum DJ-AIGCISM
ETFS Precious Metals DJ-AIGCISM
ETFS Softs DJ-AIGCISM
ETF Securities Ltd will list this entire platform of ETCs within the next few weeks, enabling investors to effectively trade commodities on major stock exchanges through ordinary brokerage accounts. Investors will be able to add any combination of individual commodities and/or baskets of commodities to their equity, bond and alternative asset portfolios. Investors will also be able to trade individual commodities tactically as opposed, or as well as, equities in commodity companies.
Similar to Exchange Traded Funds, ETCs are relatively new investment tools which enable investors to gain exposure to commodity prices without trading futures or taking physical delivery. They are open-ended securities which can be bought and sold intraday by investors on a regulated exchange in the same way as any equity. The new ETCs will track the underlying commodity index and no trading or management of futures contracts is required. Pricing is provided by renowned market makers, is transparent and the ETCs are liquid, accessible, simple and flexible.
Indices tracking individual commodities are an innovation by Dow Jones and AIG-FP and these ETCs are a world-first. To date only a few individual ETCs have been listed, but investors will be able to track 19 different commodities through these new ETCs. The new ETCs will be the first listed products to track a series of sub-indices representing individual commodities along with commodity groups that have recently been added to the Dow Jones-AIG family of commodity indices. In addition, this will be the first time that price exposure to some of these commodities will be available on an exchange in European hours. In fact, for some of the commodities it will be the first time that the price exposure will trade electronically as opposed to open outcry.
The management of ETF Securities Ltd launched the world’s first ETC (Gold Bullion Securities in Australia), listed Gold Bullion Securities in London in 2004, and then listed the world’s first oil ETC, ETFS Brent Oil in July 2005. These products have attracted approximately USD 2 billion in assets on the London Stock Exchange. Globally, ETCs have grown to over USD 14 billion in assets.
