BlackRock announced today that its iShares Exchange Traded Funds has launched five funds focused on commodity producers. The funds offer the benefit of access to companies involved in the production of commodities without the costs found in commodity ownership.
These new global equity-based funds offering access to commodity producers are: iShares MSCI Global Agriculture Producers Fund; iShares MSCI Global Energy Producers Fund; iShares MSCI Global Select Metals & Mining Producers Fund; iShares MSCI Global Gold Miners Fund and iShares MSCI Global Silver Miners Fund.
“Commodities are a key allocation in many portfolios, often used as portfolio diversifiers or a hedge against inflation,” said Darek Wojnar, head of U.S. iShares Product Development and Management at BlackRock. “Commodity producer ETFs are a unique way for investors to access equity-based exposure to this asset class, wrapped with the diversification benefits of an ETF.”
The iShares commodity producing ETFs include only companies at, or near, the initial phase of production of the commodity. For example, investors looking to express a view on global food prices can use the Global Agriculture Producers Fund to target the front end of the production chain (fertilizers or agricultural materials) while excluding exposure from companies at the end of the production chain (packaging and marketing). Companies at the beginning of the production cycle are more sensitive to fluctuations in the underlying commodity price, whereas companies further down the production cycle are impacted by a number of factors in addition to commodity prices.
“Through these new funds, investors can implement an equity-based solution for achieving highly targeted exposure to appealing commodity sectors, complementing or even replacing physically-backed or futures-based commodities approaches,” said Wojnar. “These funds offer an excellent example of the flexibility and efficiency of the ETF vehicle in helping investors implement tactical asset allocation strategies focused on taking advantage of the global markets’ most attractive emerging opportunities.”