UBS ETF (IE) Bloomberg Commodity CMCI SF UCITS ETF (USD)

Issuer: UBS

Asset Class: Commodity

TER: 34bps

Trading Currency: GBX

Pays Income: False

Listing Date: 06 Mar 2018

Ticker: UD07

ISIN: IE00BYYLVH00

This fund offers investors broad and diversified exposure to the global commodities market by tracking a comprehensive benchmark index. The underlying index provides a broad representation of the commodity universe, covering key sectors such as energy, agriculture, industrial metals, precious metals, and livestock. By investing in a wide basket of commodities through futures contracts, the fund aims to capture the overall performance of this asset class while mitigating the concentration risk associated with investing in a single commodity. Its strategy is implemented via synthetic replication, which allows for efficient tracking of the index's performance. The accumulating share class structure means that any income generated is automatically reinvested back into the fund, fostering potential for long-term capital growth.

Commodities can play a unique role within a diversified investment portfolio. Historically, they have exhibited a low correlation to traditional asset classes like equities and fixed income, making them a valuable tool for enhancing portfolio diversification and potentially reducing overall volatility. Furthermore, commodities are often considered an effective hedge against inflation, as their prices tend to rise during periods of increasing price levels for goods and services. This product is therefore suitable for investors looking to protect their purchasing power and add a diversifying element to their existing investments.

The index methodology incorporates a 'constant maturity' feature, which means it provides exposure to futures contracts with a rolling maturity date. This approach is designed to provide a more stable and representative return from the commodity futures market by optimizing the roll yield, which can be a significant factor in the total return of a commodity futures investment. This makes the fund an appealing option for investors seeking strategic, long-term exposure to the asset class rather than short-term tactical plays.