As more investors consider ways to diversify risk away from traditional stock and bond holdings, investors may turn to alternative assets like commodities.
“We’re hearing some interest in less correlated assets – something outside of that kind of core beta equity allocation. So, for us, we think commodities very quickly, and we have a very diverse lineup of those products,” Gavin Filmore, Head of Listed Product Development, Barclays, said at the Inside ETFs conference.
For example, the iPath Gold ETNs (GBUG) and the iPath Silver ETNs (SBUG), which are also the first no-fee exchange traded products offering exposure to precious metals, offer investors exposure to commodity futures by tracking the performance of two Barclays indices: the Barclays Gold 3 Month Index Total Return, and the Barclays Silver 3 Month Index Total Return, respectively.
Each index is intended to reflect the performance of specified gold or silver futures contracts that will become the first liquid nearby futures contracts three months in the future, per a specified schedule. Additionally, the indices also reflect the return corresponding to the weekly-announced interest rate for specified 3-month US Treasury bills.
Barclays also offers a broad commodity ETN, the iPath Bloomberg Commodity Index Total Return ETN (NYSEArca: DJP), to help investors access the diverse commodities space. The ETN tries to reflect the performance of the Bloomberg Commodity Index Total Return Index, which includes exposure to gold, natural gas, copper, WTI crude, corn, soybeans, Brent crude, aluminum, live cattle, and silver.
Potential investors, though, should note that these are ETNs, not ETFs. ETNs are unsecured debt obligations of the issuer, Barclays Bank PLC. Any payment to be made on the ETNs, including any payment at maturity or upon redemption, depends on the ability of Barclays Bank PLC to satisfy its obligations as they come due. Consequently, there are risks in case the underwriter or Barclays comes under financial duress.
Watch Gavin Filmore Discuss Alternative Assets:
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