Rather then invest in physical commodities or commodity-linked notes, the Fund invests in exchange-traded futures contracts trading on regulated futures exchanges in the United States. This gives the fund several advantages over investing in physical commodities. These advantages include market transparency, interest return on cash not used for margin, transaction cost savings, no spoilage risk, and very low counterparty risk.
Studies have shown that commodities as an asset class can offer significant risk-adjusted benefits to a diversified portfolio of stocks and bonds over time. This risk-return profile enhancement is thought to be attributable to the historically low correlation and similar levels of volatility that commodities have with other investable asset classes. In addition to a portfolio context, commodities have also been shown to offer unique risk and return opportunities as a direct investment beyond that of just a simple inflation hedge.
Source: CISDM Research Department
- Broad Based– Equal weight exposure to 17 different commodities
- Low Correlation to Stocks – Low correlation can help an overall portfolio’s risk/return profile
- Easy Access – No futures accounts or licenses required
- Low Cost – Cost effective investment in hard to reach markets (Ordinary brokerage fees apply)
- Liquid – Intraday trading and ability to short
- Transparent – Daily holdings are listed on website
