BlackRock, Inc. (NYSE: BLK) announced today that its iShares Exchange Traded Funds (ETFs) business, the world’s largest manager of ETFs 1, has launched the iShares Dow Jones-UBS Roll Select Commodity Index Trust (NYSE Arca: CMDT) on the NYSE Arca. It is the first exchange traded product based on the Dow Jones-UBS Roll Select Commodity Index, which currently tracks 22 commodities futures contracts, including agriculture, energy and metals, and is designed to minimize the costs of closing expiring futures contracts and replacing them for new ones.
“Many investors look to commodities to diversify beyond stocks and bonds, but when investing in commodity funds that typically hold futures contracts, the buying and selling of contracts can detract from fund performance. By using an innovative index the iShares Dow Jones-UBS Roll Select Commodity Index Trust seeks to minimize the costs of changing or ‘rolling’ futures contracts, enabling the Trust to ultimately provide investors efficient access to diversified commodities,” said Ravi Goutam, Head of Americas Product for iShares at BlackRock.
The iShares Dow Jones-UBS Roll Select Commodity Index Trust accesses commodities exposure through commodity index futures contracts. When the contracts are close to expiring, the fund replaces the contracts with new ones. This process is known as “rolling.” If the fund is rolling contracts for costlier later-dated contracts then the commodity market is in ‘contango’, which may detract from performance. If the later-dated contracts are less expensive than the contracts held by the fund, then the commodity market is in ‘backwardation’, which may add to performance.
The Dow Jones-UBS Roll Select Commodity Index, a version of the Dow Jones-UBS Commodity Index, aims to mitigate the effects of contango on performance. For each commodity, the index rolls into the futures contract that shows the most backwardation or least contango, selecting from those contracts with nine months or fewer until expiration.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV