UBS ETF CMCI Composite SF UCITS ETF (Hedged to GBP)
| Issuer: UBS |
| Asset Class: Commodity |
| TER: 34bps |
| Trading Currency: GBX |
| Pays Income: False |
| Listing Date: 10 Mar 2015 |
| Ticker: UC90 |
| ISIN: IE00B50XJX92 |
This fund offers investors a diversified gateway to the global commodities market, providing a potential hedge against inflation and a source of portfolio diversification away from traditional equities and bonds. It achieves this by tracking a benchmark index that represents a broad basket of commodity futures. The underlying index is composed of various sectors including energy, industrial metals, precious metals, agriculture, and livestock. This comprehensive exposure ensures that returns are not overly dependent on the performance of a single commodity or sector, spreading risk across the asset class.
A key feature of the fund's strategy is its methodology for managing futures contracts. Instead of just holding front-month contracts and rolling them, the index it tracks employs a "Constant Maturity" approach. This involves holding a range of contracts with different expiry dates, aiming to optimize the roll yield. This technique is designed to reduce the negative effects of contango (when future prices are higher than spot prices) and capitalize on backwardation (when future prices are lower than spot prices), which can be a significant factor in the long-term returns of commodity investments. This particular share class is also structured to mitigate currency risk for investors holding British pounds, as it hedges the fund's underlying currency exposure back to sterling.
The product is structured as an accumulating share class, meaning that any income or gains generated by the underlying holdings are automatically reinvested back into the fund. This process allows for the potential of compounded growth over time, making it suitable for investors with a long-term horizon who are not seeking immediate income distributions. By using a synthetic replication model based on futures contracts, the fund provides exposure to commodity price movements without the complexities and costs associated with storing and trading physical raw materials.
