Are investors growing leery of the equities market?
In a possible sign of skittishness, the $ 30.2 billion SPDR Gold Shares (ARCA:GLD) fund rose 1.3% in the past week as the $ 169 billion SPDR S&P 500 (ARCA:SPY) lost 5% in a broad stock sell-off.
Now investors seeking to diversify portfolios with commodities have a new choice: an ETF described as the first to provide long-only, broad exposure to the asset class in a 1940 Act structure.
On Thursday, the investment firm BlackRock (NYSE:BLK) launched iShares Commodities Select Strategy (), which gives diversified exposure to commodities through both futures and equities.
BlackRock designed the actively managed fund to simplify tax filings, because it does not produce the cumbersome K-1 form that most commodity funds use.
“It removes a tax barrier that may have kept investors away from commodities,” Patrick Dunne, head of iShares global markets and investments at BlackRock, said in a press statement.
COMT’s ’40 Act structure means that taxable gains and distributions get reported on the standard 1099 tax form that most mutual funds and ETFs use.
Investors can use this “all-in-one commodity solution” to diversify their portfolios and protect against inflation, Dunne added.
The fund manager uses a roll methodology to enhance returns by minimizing the negative impact of contango. This technical term describes a structure of the futures curve where the future price is above the expected future spot price.
COMT invests in futures contracts spanning agriculture, livestock, energy, industrial metals and precious metals. In addition, it holds stocks of commodity-producing companies for diversified exposure.
The fund has an expense ratio of 0.48%.
BlackRock, which runs iShares, manages $ 4.5 trillion in assets. IShares offers more than 600 ETFs on 20 exchanges worldwide.