BlackRock has expanded its iShares range with the launch of a new commodities ETF, the asset management company has announced.
The iShares Diversified Commodity Swap Ucits ETF will aim to provide exposure to a variety of commodity markets for investors seeking portfolio diversification.
The new ETF seeks to replicate the performance of the Bloomberg Commodity USD Total Return Index.
The index aims to represent commodities that are of importance and economic significance to the world economy while capping each sector at 33% and each single commodity at 15%.
With a total expense ratio of 0.19%, the fund will use unfunded total return swaps to achieve this exposure, which is more operationally practical than holding commodities such as precious metals or livestock.
Commenting on the launch, BlackRock said diversification is becoming more difficult to achieve due to increasing correlation between equities and bonds across global markets.
It said the fund was designed as a direct response to growing investor appetite for asset classes offering stronger diversification impact in portfolios.
‘By capping the single commodity and sector exposure in the fund, investors are not overexposed to a particular part of the market. It can, therefore, serve as an alternative to purchasing individual futures or investing directly in physical commodities,' it added.
The fund is available in Austria, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Norway, Spain, Sweden and the UK.
Earlier this month the firm also launched two new equity income ETFs for its iShares Dividend ETFs offering.