ETF Securities has filed with the Securities and Exchange Commission to add 18 commodity exchange traded funds (ETFs) to its current U.S.-based lineup. The funds may give investors the tax treatment they’ve been seeking in commodity funds.
ETF Securities is planning a series of commodity ETFs that may have more favorable tax treatment. It’s no small addition to the provider’s line-up: right now, ETFS has four funds trading. If these funds come to market, it would bring the total available up to 22. [Trading in Commodities Hits Highs.]
Matt Hougan for Index Universe reports that the new U.S. filing covers eight traditional long commodity funds, five short commodity funds and five leveraged funds. The goal is that each fund will track an index that aims to capture the performance of a fully collateralized rolling position in front-month commodity contracts. [Gas ETFs This Driving Season.]
The potential tax advantage is that these funds won’t invest in actual futures contracts as most U.S.-based commodity ETFs do. Instead, they will enter into a special kind of swap agreement, which may boost the long-term tax efficiency of the funds. This means that investors wouldn’t be taxed as though they were holding the futures held by the ETF. Both futures and futures-based ETFs are taxed as 60% long-term gains and 40% short-term gains, so you can see the appeal of these new funds. [5 Things to Know About ETFs and Taxes.]
ETFS has four funds trading in the United States with about $1.5 billion in assets under management. [ETF Industry Hits a Milestone.]
For more stories about new ETFs, visit our New ETFs category.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.