iShares Plans Broad Commodity Offerings

By
Alex Ulam
November 18, 2011
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iShares continues push into more focused strategies, filing to market five broad commodity-focused equity funds.

iShares filed regulatory paperwork with the Securities and Exchange Commission to bring to market five separate equity ETFs focusing on commodities, in the latest sign the world's biggest exchange-traded fund firm is focusing on increasingly granular investment strategies.

With its new comprehensive menu of equity ETFs, iShares is offering exposure to almost the whole world of commodities including industrial metals, precious metals, agriculture and energy. All five funds utilize representative sampling strategies, meaning they don’t seek to own all the companies in the MSCI indexes they track. They also are broad-based funds that provide diversification by including stocks in a wide variety of regions and countries, both developed and developing.

The planned iShares MSCI Global Select & Mining Producers Fund for example, follows an MSCI index that consists of companies in 36 countries, again both in developed and emerging markets. Also, the iShares MSCI Global Silver Miners Fund iShares has in the works invests in equity companies involved in silver mining in Canada, Hong Kong, Mexico, the United Kingdom and the United States.

The filings are part of big push among ETF firms to serve up a variety of commodity funds related to increased global demand for everything from oil to copper to corn and even gold. Among the options available are equity funds, such as the iShares lineup, physically backed funds such as the SPDR Gold Shares (NYSEArca: GLD) and futures-based ETFs such as the United States Copper Index Fund (NYSEArca: CPER) that launched this week.

Investors favor different commodities for a variety of reasons. Some, such as gold and silver, are seen as a flight-to-safety investment. Other commodities, like industrial metals and agricultural products, are in high demand, particularly from developing nations.

One advantage of equity ETFs like the five that iShares has in the works is that companies—unlike gold ingots and futures contracts—often pay dividends. That said, S&P is predicting that physically backed commodities ETFs could triple in Asia in the next five to seven years, according to an article in today’s Bloomberg Businessweek.

The names of the iShares funds and links to their filings are as follows:

iShares MSCI Global Gold Miners Fund

iShares MSCI Global Select Miners and Producers Fund

iShares MSCI Global MSCI Global Energy Producers Fund

iShares MSCI Global Agriculture Producers Fund

iShares MSCI Global Silver Miners Fund

Shares didn’t list ticker symbols or annual expense ratios for the five planned funds.

ETF DAILY DATA

Massive inflows into U.S. equity funds on Monday, Dec. 22, propelled total ETF assets to a new record.

'SPY' raked in more than $12 billion Monday, Dec. 22, pacing State Street's issuer-leading inflows on the day, as total U.S.-listed ETF assets jumped to $2.005 trillion.

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