Lastly, BEF tries to provide long-term capital appreciation designed to exceed the performance of the Bloomberg Energy Index 3 Month Forward Index, which tracks movements in the prices of rolling positions in a basket of commodity futures with a maturity between 4 and 6 months.
The funds will gain exposure to commodity futures contracts through a wholly-owned subsidiary of the fund, which invests directly in commodity-linked instruments.
By indirectly gaining exposure to the commodities market through investing in the wholly-owned subsidiary, the suite of active commodity ETFs may avoid troublesome K-1 forms. Many investors may have noticed that commodity ETFs that track futures markets will complicate tax headaches by issuing K-1 tax forms. These new funds are K-1 free.
BCI and BCD come with a 0.29% expense ratio, and BEF has a 0.39% expense ratio. They are the cheapest diversified commodity ETFs in the U.S.
“We have listened to investors’ needs and responded by offering inexpensive, tax-efficient ETFs that deliver broad commodity exposure in a simplified and modernized product,” Steven Dunn, Executive Director and Head of U.S. Distribution, said in a note. “As the third largest Exchange Traded Product (ETP) commodity provider in the world, it only made sense that ETF Securities spearhead the development of these funds, building on our long history of innovation, and democratizing access to commodities for investors.”
For more information on new fund products, visit our new ETFs category.