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Global X launches all-in-one commodities ETF

By Jessica Penny
3 minute read

The ETF provider has enabled Australians to gain exposure to a well-diversified basket of commodities.

Global X ETFs has announced the launch of the Global X Bloomberg Commodity ETF (Synthetic) (ASX: BCOM) on the Australian Securities Exchange (ASX), a move that the firm said will provide exposure to commodities which are significant to the world economy and have low correlation with share and bond prices.

In a statement on Wednesday, Global X confirmed that BCOM tracks the Bloomberg Commodity Index 3-Month Forward Excess Return and offers investors liquid exposure to a broad-based basket of soft and hard commodities.

Commenting on the launch, Global X head of investment strategy, Blair Hannon, said: “Commodities have historically exhibited low correlations with most assets Australians consider, such as property, shares, and bonds. Investment in this asset class enhances the opportunity for investors to gain attractive risk-adjusted returns.

“BCOM offers exposure to commodities which are some of the most significant to the global economy. They tend to have the largest and most liquid futures markets, making them easiest for investors to access.

“Importantly, commodities function as a natural hedge against inflation; their prices tend to rise when inflation is rising. For this reason, commodities can add protective benefits to a portfolio as inflation continues to prove persistent.”

Namely, commodities cover a broad range of raw materials and generally fall into six categories: energy, precious metals, industrial metals, livestock, grains and soft commodities such as coffee, cotton, and sugar.

According to Mr Hannon, BCOM “packages all these subcategories into one fund while capturing the performance of the entire commodities asset class for investors”.

“We are proud to work with Global X for their launch of the first broad-based commodity ETF in Australia,” added Ji Zhuang, APAC head of indices at Bloomberg.

“With the current global uncertainty, investors are attracted to products with more diversified exposures to hedge long-term macroeconomic risks. Our established BCOM index is uniquely designed to focus on market liquidity and diversification with capping mechanisms to preserve balance over time.

“In addition, the BCOM Forward indices offers investors a comprehensive set of exposures along the commodity curve, allowing ETF providers like Global X to customise their offering,” Mr Zhuang concluded.

BCOM is the 33rd ETF from Global X launched on the ASX.

In May, the ETF provider also projected that the ongoing rise of thematic ETFs and product innovation will be dominant themes in Australia’s ETF industry over the next five years.

Out of the-now 33 funds in the local market that Global X offers, 11 are in the thematic space, with a total of $5.6 billion in funds under management.

At the time, Mr Hannon argued that ETF providers such as Global X needed to be at the forefront of megatrends that will offer value to investors.

“Thematic ETFs are very important to investors’ portfolios because they identify long-term structural trends and leverage those trends to enable investors to build wealth over time. We are identifying powerful macro-level trends and the companies that stand to benefit from those trends over the years to come,” he said.