First Trust Bloomberg Scarce Resources UCITS ETF Acc

Issuer: First Trust

Asset Class: Equity

TER: 65bps

Trading Currency: GBX

Pays Income: False

Listing Date: 24 Jan 2024

Ticker: FSCR

ISIN: IE000BW2B3J3

This fund offers exposure to a basket of scarce resources, which are becoming increasingly important due to growing global demand, population growth, and the transition to a greener economy. It invests in futures contracts tracking a diversified group of essential commodities across energy, industrial metals, precious metals, and agriculture. This provides a broad approach to a critical segment of the global economy and can serve as a potential hedge against inflation, as commodity prices often rise in tandem with the general price level.

The investment thesis is built on the long-term structural trend of resource scarcity. As emerging economies develop, their demand for raw materials for infrastructure, manufacturing, and food consumption intensifies. Concurrently, the global push towards decarbonization and electrification requires vast amounts of specific metals like copper and aluminum, which are central to this fund's strategy. This creates a compelling supply-demand imbalance that could support prices over time. The underlying index methodology focuses on commodities with significant supply constraints and growing demand profiles, aiming to capture the performance of the most critical and finite resources.

Incorporating this investment into a portfolio can offer diversification benefits, as commodity returns often have a low correlation with traditional stocks and bonds. It allows investors to participate in the performance of assets that are fundamental to economic activity and global megatrends like urbanization and sustainability. By tracking a broad range of essential resources, the fund mitigates the volatility associated with any single commodity, offering a more balanced exposure to the potential upside of this compelling long-term theme.