Portfolio diversifier
Commodities have low correlations with traditional assets such as equities, making them a great source of differentiation in a portfolio.
Broad commodities: the portfolio super diversifier
As the European leader in commodity exchange-traded funds (ETFs) and exchange-traded commodities (ETCs), investors have been relying on WisdomTree products to access the asset class since 2004. Our comprehensive range of broad commodity ETFs include diversified baskets with varying exposures, capturing anything from energy resources and metals to agricultural goods.
A staple within many multi-asset portfolios, broad commodity baskets rose to prominence in 2020 when global exchange traded-product (ETP) flows exceeded $6 billion1 — an effect driven by COVID-induced supply-side shocks across the commodities complex. The strong demand for broad commodities from ETP investors didn’t end in 2020, though. As pandemic supply disruptions rumbled on, 2021 witnessed global net inflows of $13.2 billion2 pour into broad commodity ETPs.
But such is the appeal of broad commodities: allowing investors to align their portfolios with different economic regimes and opportunities across multiple sectors and numerous products.
Energy
+ Brent Crude Oil + WTI Crude Oil + Natural Gas + Petroleum + Heating Oil + Gasoline + Diesel
Industrial Metals
+ Copper + Aluminium + Zinc + Nickel + Lead
Precious Metals
+ Gold + Silver + Platinum + Palladium
Agriculture and Livestock
+ Live Cattle + Lean Hogs + Wheat + Corn + Soybeans + Soybean Oil + Coffee + Cocoa + Sugar + Cotton
But commodities aren’t just a tactical play for the short-term investor. Economists have long advocated for the use of broad commodities in long-term strategic asset allocations due to their unique characteristics. Research demonstrates that their risk premium has historically paid above inflation over the long term, and offered downside protection during inflationary market conditions when their prices typically appreciate in line with rising demand.
1 Bloomberg, 9 April 2021.
2 Bloomberg, 6 January 2022.
Broad commodities: a versatile asset in a portfolio
To learn more about the role of broad commodities in a portfolio, view our Portfolio Insight.
Broad Commodities by WisdomTree
There are many ways to access the asset class through our diversified commodity ETFs. Our innovative solutions range from benchmark-tracking products to enhanced strategies with dynamic futures selection mechanisms. We also offer currency hedges and sector exclusions to match varying investment needs.
| The Smart Benchmark | The Enhanced Strategy | The ex-Agriculture Enhanced Strategy | |
|---|---|---|---|
| Product name | WisdomTree Broad Commodities UCITS ETF | WisdomTree Enhanced Commodity UCITS ETF | WisdomTree Enhanced Commodity ex-Agriculture UCITS ETF |
| Investment approach | Smart Broad Commodity (BCOM) replication | Enhanced replication of Broad Commodities | Enhanced replication of Broad Commodities ex-Agriculture |
| Tracking error | Low | Medium | Medium |
| Weighting mechanism | Rebalance to BCOM weights every January | Starts from BCOM weights and dynamically adjusts based on quantitative factors | Rebalance to target weights quarterly |
| Futures rolling mechanism | Front-month futures contract rolled every 2 months. Physical Precious Metals ETCs for Gold and Silver | Dynamic roll selection distinguishing seasonal and non-seasonal commodities | Dynamic roll methodology (monthly optimisation) |
| Number of commodities | 25 | 25 | 15 |
| Commodity types | Precious metals, Industrial metals, Energy, Agriculture & Livestock | Precious metals, Industrial metals, Energy, Agriculture & Livestock | Precious metals, Industrial metals, Energy |
Broad Commodities UCITS ETFs
The WisdomTree Broad Commodities UCITS ETF provides access to a diverse range of 25 individual commodities by replicating the Bloomberg Commodity Total Return Index with the potential for outperformance by delivering its precious metals exposure through physical replication of gold and silver.
WisdomTree Broad Commodities UCITS ETF - USD Acc
PCOM/COMX
The Fund seeks to track the performance, before fees and expenses, of the Bloomberg Commodity Total Return Index using an innovative replication method which includes direct exposure to spot prices for the precious metals portion of the index. Access as an accumulating share class.
