By offering exposure to a broad range of commodities, the ETF reduces volatility in comparison to non-diversified commodity investments as performance avoids being driven by micro-economic events affecting one particular commodity or sector.
Listing on the London Stock Exchange and Börse Xetra, the WisdomTree Broad Commodities UCITS ETF offers exposure to energy, agriculture, as well as industrial and precious metals.
Exposure to the precious metal sector is provided through the replication of gold and silver, the firm highlighted. The ETF tracks the performance of the Bloomberg Commodity Total Return index and has a management expense ratio of 0.19%.
Nitesh Shah, head of commodities and macroeconomic research, Europe at WisdomTree, said: “Broad commodities have historically been one of the best hedges against inflation.
“Inflation in the US and Europe is running at the highest levels in over a decade, mainly driven by supply-side shocks, which commodities are uniquely positioned to protect against.”
He added: “Energy price spikes, drought-induced food price increases and transit bottlenecks, for example, feed directly into commodity prices and the consumption baskets that inflation figures are calculated from.”
Shah highlighted that short-term phenomena alone are not the driving force behind commodity prices.
“An infrastructure renaissance combined with an energy transition could drive a super-cycle in certain commodities for the coming decade,” he said.
According to Bloomberg data, net flows into broad commodity ETPs globally stand at $12bn year-to-date as of 30 November. WisdomTree said gaining exposure to broad commodities has become an “increasingly important” feature in the current market environment.