WisdomTree is adding to its commodities UCITS line up with the launch of a broad commodities exchange-traded fund (ETF).
The WisdomTree Broad Commodities UCITS ETF (PCOM), listed on the London Stock Exchange (LSE) and Börse Xetra, tracks the Bloomberg Commodity Total Return Index, which covers four broad commodity sectors: energy, agriculture, industrial metals, and precious metals.
Precious metals exposure is delivered through physical replication of gold and silver, according to the firm, whereas total return swaps are harnessed to deliver performance for the energy, agriculture, and industrial metals components of the index.
“Broad commodities have historically been one of the best hedges against inflation. Inflation in the US and Europe is running at the highest levels in over a decade, mainly driven by supply-side shocks, which commodities are uniquely positioned to protect against,” said Nitesh Shah, head of commodities and macroeconomic research, Europe, at WisdomTree.
The index is diversified and not driven by micro-economic events affecting one commodity or sector which reduces volatility compared to other, non-diversified commodity investments.
According to Bloomberg data, net flows into broad commodity exchange traded products (ETPs) globally stand at $12 billion.
PCOM is registered for sale in Austria, Denmark, Finland, Germany, Italy, Luxembourg, Netherlands, Spain, Sweden and the UK.
“Energy price spikes, drought-induced food price increases and transit bottlenecks, for example, feed directly into commodity prices and the consumption baskets that inflation figures are calculated from. It’s not just these short-term phenomena that are driving commodity prices. An infrastructure renaissance combined with an energy transition could drive a super-cycle in certain commodities for the coming decade,” added Shah.
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