BlackRock’s iShares has rolled out two new exchange traded fund strategies, including a focused U.S. infrastructure play and an actively managed K-1 free commodity futures fund.
The two new ETFs include the iShares U.S. Infrastructure ETF (Cboe: IFRA) and iShares Bloomberg Roll Select Commodity Strategy ETF (NYSEArca: CMDY), which have a 0.40% expense ratio and a 0.28% expense ratio, respectively.
The iShares U.S. Infrastructure ETF tries to reflect the performance of the NYSE FactSet U.S. Infrastructure Index, which includes U.S. companies focused on infrastructure activities, according to a prospectus sheet.
Specifically, component holdings fall under one of the 95 infrastructure-related industries defined by FactSet Revere Business Industry Classification System. Each company is classified as either Category 1 or Category 2, where Category 1 companies are infrastructure enablers and Category 2 are infrastructure asset owners and operators. The index is all equally weighted.
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Category 1 infrastructure enablers include those in construction and engineering services, machineries and materials. Category 2 or infrastructure asset owners and operators are companies associated with traditional equity infrastructure investing, including those in energy transportation and storage, railroad transportation and utilities.
IFRA sector weights include utilities 41.2%, industrials 30.7%, materials 19.3%, energy 5.3%, real estate 1.7% and consumer discretionary 1.6%. Top holdings include Potlatchdeltic 1.2%, Vistra Energy 0.9% and Cheniere Energy 0.9%.
K-1 Free Commodity ETF
The actively managed iShares Bloomberg Roll Select Commodity Strategy ETF tries to provide exposure to a diversified group of commodities through commodity futures exposure. While it is not an index fund, the active managers will seek to maximize correlation with the Bloomberg Roll Select Commodity Index, which is composed of 22 futures contracts across 20 physical agricultural, energy, precious metals and industrial metals commodities, according to a prospectus sheet.
Furthermore, the Bloomberg benchmark employs a contract roll strategy to limit the negative effects of contango and maximize the effects of backwardation – contango is a situation where the futures price of a commodity is above its spot price while backwardation is the opposite.
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Unlike older commodity ETFs that are structured as a commodity pool, CMDY is packaged in the 1940 Act wrapper or structured as a open-ended fund. The fund will invest in a subsidiary based in the Cayman Islands for the actual futures portfolio, which can make up 25% of the whole fund, while the main portion is held stateside and cosnsists of collateral for the funds, which inclues debt securities and cash equivalents. Through this investment structure, potential investors would not have to deal with a burdensome K-1 form come tax season.
For more information on new fund products, visit our new ETFs category.