L&G Multi-Strategy Enhanced Commodities UCITS ETF GBP Hedged (Acc)

Issuer: L&G ETFs

Asset Class: Commodity

TER: 35bps

Trading Currency: GBX

Pays Income: False

Listing Date: 22 Jun 2023

Ticker: ECGH

ISIN: IE00011CA799

This fund provides investors with actively managed exposure to a diversified basket of global commodities, including energy, metals, and agriculture. It aims to outperform traditional commodity benchmarks by employing a sophisticated, multi-factor approach. Investing in commodities can serve as a potent portfolio diversifier, given their historically low correlation to traditional asset classes like equities and bonds. Furthermore, they can act as an effective hedge against inflation, as raw material prices often rise during periods of increasing price levels.

The core of the investment strategy revolves around three distinct systematic approaches: roll yield, momentum, and value. The 'roll yield' strategy seeks to generate returns by capitalizing on the shape of the commodity futures curve. The 'momentum' factor involves investing in commodities that have demonstrated strong recent price performance, aiming to capture continuing trends. Finally, the 'value' component identifies and invests in commodities that appear undervalued based on their historical price data. This active, multi-pronged strategy is designed to enhance returns and manage risk compared to passive commodity index tracking.

The fund utilizes unfunded total return swaps to gain its exposure to the underlying commodity markets efficiently. This specific share class is also currency-hedged, which means it aims to mitigate the impact of exchange rate fluctuations between the fund's base currency and British Pounds. This feature makes it particularly suitable for investors based in the UK who want to isolate their investment returns from foreign exchange volatility.