Optimized Jim Rogers RICI ETNs Coming Soon

November 01, 2012


RICI Commodity TR - 5 Yrs

Source: Bloomberg

RICI Agriculture TR - 5 Yrs

Source: Bloomberg

As you can see, the enhanced RICI indexes performed exceptionally well, outperforming the first-generation indexes over a five-year period.

RBS Renewed?

The next big question is whether investors will take to these new, more complex indexes.

Based on historical returns, these optimized indexes look to be superior products to the first-generation, front-month rolling indexes.

Jim Rogers also has quite a following in the commodities space.

Of the 11 Elements ETNs currently trading, the top four by assets are RICI-based ETNs, with RJI and RJA accounting for over $1 billion of the Elements’ $1.23 billion in total assets.

Still, RBS might have some work ahead of it.

Specifically, I’m thinking of iPath, which in April 2011 launched optimized versions of its existing series of first-generation commodity ETNs. Currently, those 19 optimized “Pure Beta” iPath ETNs are collecting dust with little to no assets.

It’ll be interesting to see if investors shift some of that $646 million in assets out of RJI into the new RGRC or the $394 million from RJA into the new RGRA.

RBS has struggled somewhat with its suite of ETNs in the U.S. thus far, with total assets of $198.7 million among eight ETNs. Its most successful strategy, the RBS U.S. Large Cap Trendpilot ETN (NYSEArca: TRND), has amassed just $85 million in assets.

Perhaps this new suite of RICI ETNs can reignite or jump-start RBS’ U.S. ETN business.

I think it’s a real possibility.

Still, for that to happen, RBS needs convince investors of the true benefits and superiority of these products compared with the existing Elements products.

At the time this article was written, the author held a long position in RJA. Contact Dennis Hudachek at [email protected].

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