Active Commodities


iShares lists actively managed commodity ETF

Commodities have had a hard time the past several years, but BlackRock is listing a new fund that grows out the garden. The iShares Bloomberg Roll Select Broad Commodity ETF (CMDY) will join a small club of actively managed commodities ETFs and will seek to provide a return similar to the Bloomberg Roll Select Commodity Index. BlackRock already has a fund tracking this index: the iShares Commodity Optimized Trust. 

Besides active management, the other difference between CMDY and CMDT appears to be that newcomer CMDY “does not seek to replicate the performance of a specified index,” the prospectus says. Rather, it “seeks to maximize correlation with the Bloomberg Roll Select Commodity Index.” The distinction between replicating an index and maximising correlation seems rather thin, to this writer at least. Both funds are structured as commodity pools.

Like other ETCs, CMDY will roll in and out of futures contracts and use other types of derivatives – swaps and options in particular – to achieve its exposure. However, the prospectus notes that the fund is under no obligation to invest in futures.

I was more confused having read the prospectus than I was beforehand…