WisdomTree Updates ETF Family with Enhanced Commodity Strategy Fund (GCC)
WisdomTree has reorganized its Continuous Commodity Index Fund into the WisdomTree Enhanced Commodity Strategy Fund, aiming to offer broad-based commodity exposure through futures contracts.
The new fund, with an expense ratio of 0.55%, diversifies across over 25 commodities in four major sectors, enhancing its strategy to maximize carry and reduce volatility. This shift comes amid rising inflation concerns as economies recover from lockdowns, making commodities attractive hedges. Investors should consider the associated risks before investing in this new fund.
- Reorganization into a new fund allows broader exposure to over 25 commodities compared to 17 in the previous fund.
- Lower expense ratio of 0.55% enhances cost-effectiveness for investors.
- Dynamic maturity selection aims to maximize returns and reduce volatility.
- Fund is newly established with limited operating history, adding uncertainty for investors.
Reorganization of Fund – previously the WisdomTree Continuous Commodity Index Fund – introduces updated approach to broad-based commodity investing
NEW YORK, Dec. 22, 2020 (GLOBE NEWSWIRE) -- WisdomTree (NASDAQ: WETF), an exchange-traded fund (“ETF”) and exchange-traded product (“ETP”) sponsor and asset manager, today announced the completion of the reorganization of the WisdomTree Continuous Commodity Index Fund (“CCIF”) into and with the WisdomTree Enhanced Commodity Strategy Fund. The Enhanced Commodity Strategy Fund is organized under the Investment Company Act of 1940, as amended, with no Schedule K-1 and an expense ratio of
Jeremy Schwartz, WisdomTree Global Head of Research, said, “The macroeconomic backdrop as we emerge from lockdowns could bring higher inflation. We believe it is a good time to investigate commodities as hedges to traditional portfolios given the sustained low interest rate environment and these elevated inflation risks.”
Enhanced Commodity Strategy Fund: What’s Under the Hood?
Taking a broad-based commodity investing approach, the Enhanced Commodity Strategy Fund seeks to:
- Provide broad-based exposure to a diversified basket of over 25 commodities across four major sectors: Energy, Agriculture (including Grains, Softs and Livestock), Precious Metals, and Industrial Metals, in contrast to CCIF, which provided exposure to a more limited basket of 17 commodities; and
- Focus on hard assets and precious metals to preserve purchasing power and industrial metals like copper, aluminum, and nickel for anticipated demand growth with the energy transition and decarbonization processes.
“The Enhanced Commodity Strategy Fund provides commodity exposure across all major sectors while recognizing through its exposures the shifting commodity demand from new technologies in electronic devices, electricity delivery and storage, transportation, communication, and manufacturing. In contrast to CCIF, the Enhanced Commodity Strategy Fund does not use a fixed rolling mechanism as it seeks to maximize carry and roll futures contracts in a manner designed to enhance returns while lowering volatility,” Schwartz added.
New Dynamic Maturity Selection
High roll costs can arise when a commodity strategy invests in a single point on the futures curve. When a futures curve is in contango (upward sloping prices over time), rolling positions in the front month, where the curve is usually steeper, could significantly erode returns if spot prices don’t rise dramatically. The Enhanced Commodity Strategy Fund’s roll strategy seeks to boost returns by dynamically selecting maturities in an effort to maximize carry, enhance return and reduce volatility compared to the more standard, front-month commodity strategies.
The Enhanced Commodity Strategy Fund is a long-only fund investing in commodities primarily through futures contracts. Target weights for each sector are generally determined annually in December driven by WisdomTree’s views on factors such as macro-economic outlook, single commodity outlooks, liquidity and economic significance. Positions are reviewed monthly based on the shapes of futures curves, by rolling applicable futures contracts into the maturity with the highest expected carry for each contract in the portfolio. During this process, tactical sector tilts that are deemed important based on sector may be implemented.
Learn more about the WisdomTree Enhanced Commodity Strategy Fund (GCC) here.
This Fund is new and has limited operating history. Past performance is not indicative of future results.
Investors should carefully consider the investment objectives, risks, charges and expenses of the Funds before investing. To obtain a prospectus for WisdomTree Funds containing this and other important information, please call 866.909.9473 or visit WisdomTree.com to view or download a prospectus. Investors should read the prospectus carefully before investing.
Commodities and futures are generally volatile and are not suitable for all investors. Investments in commodities may be affected by overall market movements, changes in interest rates and other factors such as weather, disease, embargoes and international economic and political developments.
There are risks associated with investing, including the possible loss of principal. An investment in this Fund is speculative, involves a substantial degree of risk, and should not constitute an investor’s entire portfolio. One of the risks associated with the Fund is the complexity of the different factors which contribute to the Fund’s performance. These factors include use of commodity futures contracts. Derivatives can be volatile and may be less liquid than other securities and more sensitive to the effects of varied economic conditions. The value of the shares of the Fund relate directly to the value of the futures contracts and other assets held by the Fund and any fluctuation in the value of these assets could adversely affect an investment in the Fund’s shares. Please see the Fund’s prospectus for a discussion of risks.
Because of the frequency with which the Fund expects to roll futures contracts, the impact of such contango or backwardation may be greater than the impact would be if the Fund experienced less portfolio turnover. Backwardation: a market condition in which a futures price is lower in the distant delivery months than in the near delivery months. As a result, the fund may benefit because it would be selling more expensive contracts and buying less expensive ones on an ongoing basis; and Contango: A condition in which distant delivery prices for futures exceeds spot prices, often due to costs of storing and inuring the underlying commodity. Opposite of backwardation. As a result, the Fund’s total return may be lower than might otherwise be the case because it would be selling less expensive contracts and buying more expensive one.
WisdomTree Funds are distributed by Foreside Fund Services, LLC, in the U.S. only.
Jeremy Schwartz is a registered representative of Foreside Fund Services, LLC.
About WisdomTree
WisdomTree Investments, Inc., through its subsidiaries in the U.S. and Europe (collectively, “WisdomTree”), is an exchange-traded fund (“ETF”) and exchange-traded product (“ETP”) sponsor and asset manager headquartered in New York. WisdomTree offers products covering equities, fixed income, currencies, commodities and alternative strategies. WisdomTree currently has approximately
WisdomTree® is the marketing name for WisdomTree Investments, Inc. and its subsidiaries worldwide.
WTPR-20201217-0098
Contact Information:
Media Relations
WisdomTree Investments, Inc.
Jessica Zaloom
+1.917.267.3735
Jzaloom@wisdomtree.com / wisdomtree@fullyvested.com
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