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PRESS ROOM

WisdomTree Launches Enhanced Commodity UCITS ETF on the London Stock Exchange

Monday 09th May '16

 

Hector McNeil, Co-CEO

Demonstrating continued leadership in innovative index strategies to commodity ETFs

WisdomTree has launched its first broad-based WisdomTree Enhanced Commodity UCITS ETF (the “Fund”) on the London Stock Exchange (WCOA)

The Fund tracks the Optimised Roll Commodity Total Return Index (EBCIWTT), a broadly diversified index whose weights are based on the Bloomberg Commodity Index and incorporates a smart roll mechanism, based on the S&P GSCI Dynamic Roll indices, that aims to deliver curve enhanced returns

This innovative combination of the diversified Bloomberg Commodity Index and smart roll methodology has allowed the EBCIWTT index to outperform, with lower volatility, the S&P GSCI Total Return index, the Bloomberg Commodity Index and the Thomson Reuters CRB index over the past 1, 3, 5 and 10 years1

 

London, Monday, 9 May 2016: WisdomTree, the exchange-traded fund (ETF) and exchange-traded product (ETP) sponsor today announced the launch of the WisdomTree Enhanced Commodity UCITS ETF (accumulating) (Ticker: WCOA) on the London Stock Exchange along with a GBP distributing and accumulating share classes (WCOG/WCOB).

Viktor Nossek, Director of Research at WisdomTree Europe said:

Investors are keen to incorporate broad commodity exposures in their portfolios due to the fact that it has low to negative correlations to other asset classes and therefore enhances portfolio diversification. The roll methodology in the WisdomTree Enhanced Commodity UCITS ETF substantially mitigates the costs of holding commodity futures contracts and has historically generated positive roll returns. This removes one of the main barriers to having a long term allocation to commodities, whilst the current macro environment is also supportive of increased exposure to this asset class. Across the various commodity sectors, fundamentals have improved; ranging from a steadier environment for the oil price, negative interest rates likely to benefit sentiment towards gold and a more positive view on emerging markets activity that may drive returns in industrial metals.

Hector McNeil, Co-CEO of WisdomTree Europe commented:

WisdomTree is pleased to continue bringing to market innovative solutions that provide various benefits to investors. The new Enhanced Commodity UCITS ETF offers a unique combination of exposure to broad commodities based on the underlying weights of the Bloomberg Commodity Index and enhanced roll returns. WisdomTree Europe has been successful in providing smart beta and alternatively weighted solutions in the equity space and is delighted to extend its smart approach to commodities which we believe is an important asset class.

WisdomTree Enhanced Commodity UCITS ETF  

 The Fund is benchmarked against the EBCIWTT, which is an Optimised Roll Commodity Total Return index, which aims to outperform the Bloomberg Commodity Total Return Index over the long term through minimising contango and maximising backwardation. The Index consists of 22 commodities with sector exposures of 35.5% in agriculture, 30.9% in energy, 17% in industrial metals and 15.6% in precious metals.

Commodity futures contracts trade either in contango, where forward month futures contracts trade at a premium to the current month and hence there is a cost (negative roll yield), or in backwardation, where forward month futures contracts trade at a discount to the current month (positive roll yield).

The enhanced roll mechanism incorporated in the EBCIWTT aims to maximise the roll yield and minimise roll costs related to maintaining exposure to the commodities in the index. This is achieved through a rules based dynamic approach to rolling futures contracts. The results of the enhanced roll strategy are evident from the consistently higher returns and lower risk relative to other benchmark commodity indices such as the S&P GSCI Total Return index, the Bloomberg Commodity Index and the Thomson Reuters CRB index.

 

Period Index Avg. Ann. Return Std. Dev. Sharpe Ratio Sharpe Ratio Rank
  Optimised Roll Commodity Total Return 6.10% 14.80% 0.04 1
  S&P GSCI Total Return CME -3.90% 23.60% -0.4 5
Since Inception Bloomberg Commodity Index Total Return -0.60% 17.00% -0.36 4
  RJ/CRB Commodity Total Return Index 0.90% 17.60% -0.26 3
  Rogers International Commodity Index Total Return 1.70% 18.80% -0.2 2

1 Source: WisdomTree Europe, Bloomberg. Data from 31 May 2001 to 31 March 2016.

Since it is not practical to physically invest in a range of commodities, the fund gets its commodities exposure through an unfunded total return swap that tracks the underlying futures contracts representing the 22 components of the Bloomberg Commodity Index. The fund invests in and physically holds US T-bills and any swap exposure is over-collateralised and reset on a monthly basis.

The details of the WisdomTree Enhanced Commodity UCITS ETF are:

Fund Ticker ISIN Listing Currency Base Currency
WisdomTree Enhanced Commodity UCITS ETF - USD Acc WCOA IE00BYMLZY74 USD USD
WisdomTree Enhanced Commodity UCITS ETF  - USD Acc WCOB IE00BYMLZY74 GBx USD
WisdomTree Enhanced Commodity UCITS ETF - USD WCOG IE00BZ1GHD37 GBx USD


Notes to Editors

About WisdomTree Europe Ltd.

WisdomTree Investments, Inc., through its subsidiaries in the U.S., Europe and Japan (collectively, "WisdomTree"), is an exchange-traded fund ("ETF") and exchange-traded product ("ETP") sponsor and asset manager. WisdomTree offers products covering equities, fixed income, currencies, commodities and alternative strategies. Through WisdomTree Europe Ltd, it sponsors WisdomTree UCITS ETFs and Boost short and leverage ETPs. WisdomTree currently has approximately $43.8 billion (as of 30 April 2016) in assets under management globally. For more information, please visit www.wisdomtree.com.

WisdomTree
® is the marketing name for WisdomTree Investments, Inc. and its subsidiaries worldwide.

 

Disclaimer

WisdomTree Europe Ltd is an appointed representative of Mirabella Financial Services LLP which is authorised and regulated by the Financial Conduct Authority.                                                                       

The products discussed in this document are issued by WisdomTree Issuer PLC (the Issuer), an umbrella investment company with variable capital having segregated liability between its funds and organised under the laws of Ireland as a public limited company. The Issuer has been authorised by the Central Bank of Ireland (the CBI) as a UCITS pursuant to the European Communities (Undertaking for Collective Investment in Transferable Securities) Regulations, 2003 (as amended) and shall issue a separate class of shares ("Shares) representing each fund.

The Shares are products involving a significant degree of risk and may not be suitable for all types of investor. Any decision to invest should be based on the information contained in the Prospectus. The price of any securities may go up or down and an investor may not get back the amount invested. Past performance is not a reliable indicator of future performance. Any historical performance included in this document may be based on back testing. Back testing is the process of evaluating an investment strategy by applying it to historical data to simulate what the performance of such strategy would have been. However, back tested performance is purely hypothetical and is provided in this document solely for informational purposes. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance.

This document may contain independent market commentary prepared by WTE based on publicly available information. WisdomTree Europe does not warrant, guarantee or otherwise confirm the accuracy or correctness of any information contained herein and any opinions related to product or market activity may change. This marketing information is intended for professional clients & sophisticated investors (as defined in the glossary of the FCA Handbook) only.