BEST NEW INTERNATIONAL/GLOBAL FIXED INCOME ETF
WINNER: SP Funds Dow Jones Global Sukuk ETF (SPSK)
Faith-based investments are nothing new, but they remain relatively uncommon in the bond world. Islam, in particular, prohibits the collection of interest on loans—which essentially means Muslim investors may not use the vast majority of traditional, Western-style fixed income investments.
Enter the sukuk. Sukuks are Shariah-compliant financial certificates that grant holders partial ownership in some underlying asset. Like bond owners, sukuk holders receive regular payments. But those payments don’t originate from the interest collected on a debt; instead, they’re taken from the earnings the asset generates. Thus, sukuks aren’t so much debt obligations as they are profit-sharing arrangements.
The SP Funds Dow Jones Global Sukuk ETF (SPSK) is the first fixed income ETF to provide diversified, transparent exposure to sukuks, which are a mainstay of Islamic finance, yet can be difficult for individual investors to access, as they typically trade in over-the-counter transactions.
SPSK solves a real problem for real investors, allowing Muslim and secular investors alike to participate in an asset class that, until now, they’ve had little means of accessing via an ETF. It also makes a compelling fixed income diversifier, as sukuks have similar, but not equivalent, risk/return profiles as their Western bond cousins.
BEST NEW COMMODITY ETF
WINNER: iPath Series B Carbon ETN (GRN)
The award for Best Commodity ETF of 2019 was nearly a freebie. Only two products were nominated out of the three commodity products that launched during the year. That tells you how out of favor the asset class has been lately.
All three of 2019’s commodity launches were issued by Barclays under the iPath brand—the iPath Gold ETN (GBUG), the iPath Silver ETN (SBUG) and the iPath Series B Carbon ETN (GRN).
The winner of the Best New Commodity ETF award went to GRN, a replacement product for the original iPath carbon product. GRN offers similar exposure as its predecessor, maintaining its position as the only exchange-traded product to track carbon prices.
GRN tracks the return of futures contracts on carbon emission credit prices from two of the world’s major emissions-related mechanisms—the European Union Emission Trading Scheme and the Kyoto Protocol’s Clean Development Mechanism—with the former making up the bulk of the exposure.
Like many commodity products, returns on GRN haven’t been anything to write home about, but the exchange-traded note provides unique exposure to something that may become increasingly important as investor concerns about the environment and climate change grow.
