The underlying Bloomberg Commodities Index tracks the price of rolling positions in a basket of commodity futures with a maturity between 1 and 3 months. BCD tries to provide long-term capital appreciation that exceeds the performance of the Bloomberg All Commodity Index 3 Month Forward Index, which tracks movements in the price of rolling position in a basket of commodity futures with a longer maturity between 4 and 6 months.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 energy 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 K-1 forms.
Commodities-related investments are seen as alternatives to traditional equity and fixed-income asset, helping investors diversify their investment portfolios with an alternative asset that provides little to no correlation to traditional stocks and bonds.
Financial advisors who are interested in learning more about commodities can register for the Tuesday, April 25 webcast here.