WisdomTree announced the launch of a new commodities exchange-traded fund (ETF) on Monday. The WisdomTree Broad Commodities UCITS ETF tracks the performance of the Bloomberg Commodity Total Return Index.
It purchases gold and silver in physical units while the other main commodity sectors covered in the index (energy, agriculture, and industrial metals) will all be acquired through total return swaps.
Commodities have been extremely popular among investors this year. According to WisdomTree $12bn (£9bn) of new money has flowed into the sector so far in 2021.
The benchmark index has risen in value by 32.1% in the past year as energy and metal prices have recovered from their Covid lows. This has offset a fall in the gold and precious metal prices, which are usually viewed as safe havens when markets drop. These precious metals held up well in 2020, but have struggled as the economy has recovered in 2021.
In recent months the emergence of Omicron and rising inflation have had a large impact on the commodity market.
Nitesh Shah, head of commodities and macroeconomic research at WisdomTree, said: “Broad commodities have historically been one of the best hedges against inflation. Inflation in the US and Europe is running at the highest levels in over a decade, mainly driven by supply-side shocks, which commodities are uniquely positioned to protect against.”
“It’s not just these short-term phenomena that are driving commodity prices. An infrastructure renaissance combined with an energy transition could drive a super-cycle in certain commodities for the coming decade.”
WisdomTree currently manages $24.5bn in commodity assets. The WisdomTree Broad Commodities UCITS ETF will initially have a charge of 0.19%.