Interactive Investor

Fund spotlight: WisdomTree Enhanced Commodity ETF

10th May 2021 16:48

Dzmitry Lipski from interactive investor

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Our head of funds research offers a view on the latest addition to the ii Super 60. 

The Super 60 fund: Fund spotlight: WisdomTree Enhanced Commodity ETF
Listen or read about the fund, it’s your choice.

We have added WisdomTree Enhanced Commodity ETF (LSE:WCOB) to the interactive investor Super 60 list as a Specialist Low-Cost option. It offers investors a broad and diversified commodity exposure, covering major commodity sectors such as industrial metals, precious metals, energy and agriculture.

This ETF combines both passive and active investing. It aims to track the performance of the so-called rule-based index, the Optimised Roll Commodity, while looking to outperform the widely followed passive Bloomberg Commodity Index over the long term.

The fund is well positioned to benefit from the current market climate and potentially deliver higher real returns. Its effective cost management and lower risk profile gives the strategy a competitive advantage against other funds in the sector.

What does it invest in?

This ETF offers a very well-diversified exposure to a basket of commodities. Its holdings tend to show lower correlation between each other, which is very important. At sector level, the largest allocation is to agriculture, which is around 37%. The largest individual position is in gold (over 12%). Gold is traditionally viewed as a hedge in inflationary environment.

Performance

Fund/Index/Morningstar Category 08/05/2020 - 07/05/2021 08/05/2019 - 07/05/2020 08/05/2018 - 07/05/2019 08/05/2017 - 07/05/2018 08/05/2016 - 07/05/2017
WisdomTree Enhanced Commodity ETF  28.76 -8.04 -6.48 6.35 12.53
Bloomberg Commodity Index 33.00 -15.28 -6.51 5.12 10.90
EAA Fund Commodities - Broad Basket 36.36 -16.81 -8.25 9.61 7.50

Source: Morningstar. Total Return GBP.

Why should investors consider commodities?

Commodities are considered a good source of portfolio diversification. Commodities show low correlations with equities and bonds. In addition, the asset class has historically performed in line with the movement of inflation and, as such, is typically viewed as a good hedge against inflation, which has recently become more of a concern among investors.

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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