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Stocks and Shares ISAObjective
The Share Class is a share class of a Fund which aims to achieve a return on your investment, through a combination of capital growth and income on the Fund’s assets, which reflects the return of the Bloomberg Roll Select Commodity Total Return Index, the Fund’s benchmark index (Index). The Index is designed to measure the return on commodity futures contracts comprised within the Bloomberg Commodity Index (the "Parent Index") combined with the notional value of such futures invested at the most recent weekly auction rate for 3 Month US Treasury Bills and aims to mitigate the effects of negative roll yield on the performance of the Index. Roll yield is the difference between the prices of the shorter term and the longer term futures contracts when they are rolled. A futures contract on a commodity is a type of financial derivative instrument (FDI) traded on an exchange which locks in the price at which a commodity can be bought or sold at a future date. Futures contracts need to be ‘rolled’ prior to maturity in order to maintain exposure and to avoid physical delivery of the underlying commodity. A FDI is an investment the price of which is based on one or more underlying assets. The Parent Index is designed to be a highly liquid and diversified benchmark for commodities investments, representing energy, agriculture, industrial metals, precious metals and livestock sectors. The Parent Index is designed to provide broad-based exposure to commodities as an asset class, with no single commodity or commodity sector dominating the Parent Index. The Parent Index is weighted based on the production of the underlying commodities and on the liquidity of the futures contracts on the underlying commodities (i.e. the higher the volume of production of a commodity and the greater the liquidity (using a ratio of 1:2), the higher the weighting of that commodity in the Parent Index). The Parent Index is subject to capping restrictions (which are applied at the point of its annual rebalance and may be exceeded in between rebalances) to maintain diversification. As at the end of July 2018 the Index includes 22 exchange-traded futures on physical commodities, representing the following 20 commodities: aluminum, Crude Oil (WTI and Brent), coffee, copper, corn, cotton, gold, ULS Diesel, unleaded gas, wheat (Chicago and Kansas City), lean hogs, live cattle, natural gas, nickel, silver, soybean meal, soybean oil, soybeans, sugar, and zinc. For each commodity, the Index rolls the futures contracts with nine months or less until expiration showing the most backwardation (when the price of a future commodity contract is lower than a nearer contract price) or least contango (when the price of a future commodity contract is higher than a nearer contract price). The Fund invests in FDIs and will in particular invest in unfunded total return swaps in order to achieve its investment objective. A swap agreement is typically used to achieve a specified return determined by an underlying such as a return on an index. The Fund may also invest in fixed income securities (e.g. bonds) to meet its payment obligations under the swaps. The Fund intends to replicate the performance of the Index by gaining an indirect exposure, via FDIs, to the individual constituents of the Index.
- Leverage -
- Currency hedgingNo