Elkhorn Investments, LLC, a pioneer of research-based investing, announced today the launch of the Elkhorn Fundamental Commodity Strategy ETF the first commodity exchange-traded fund (based on Research Affiliates’ fundamental research. …..
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Ben Fulton, Founder and CEO of Elkhorn
In 2006, Rob Arnott and Ben Fulton built the first Fundamentally Weighted ETF tracking U.S. stocks while Ben was at PowerShares. Ten years later, the two are teaming up again to provide investors with an ETF that provides unique access to the recently-overlooked commodity space.
“Commodities are a forgotten asset class in today’s market,” said Ben Fulton, Founder and CEO of Elkhorn. “As a result, product innovation has lagged that of other asset classes for the better part of a decade. Together with Research Affiliates, we are excited to create a better way for investors to access the broader commodity market in an ETF without a K-1 tax form.”
The Elkhorn Fundamental Commodity Strategy ETF is an actively-managed ETF that seeks to provide investment returns that are highly correlated to the Dow Jones RAFI® Commodity Index by investing in exchange-traded commodity futures contracts and other commodity-linked instruments.
The Dow Jones RAFI® Commodity Index offers an alternative beta strategy that uses price momentum and roll yield to outperform the broad market.
The ETF is designed to be a fundamental factor-weighted, broad-market commodity strategy with a modified dynamic roll.
The fund’s assets will also be invested in a short duration portfolio of highly liquid, high quality bonds to collateralize exposure and target a total return which exceeds that of the Dow Jones RAFI® Commodity Index.
Rob Arnott, Chairman and Chief Executive Officer of Research Affiliates commented, “Much is made of smart beta strategies within equities and increasingly bonds. The need for smart beta strategies within broad commodities, however, has largely been overlooked. We believe commodities can be a powerful inflation hedge and diversifier. Commodities can also offer excellent long-term return potential, especially from current levels, especially if the index rebalances against fads and bubbles.”
RCOM seeks to offer an institutionally-focused commodity solution with low tracking error to benchmark indices, a simple roll yield solution to address the potential negative impact of roll yields, and a dynamic commodity weighting methodology to adapt to the volatile commodity markets in an ETF with 1099 tax reporting (no K-1).
“In equities, benchmark indexes provide very efficient market exposure. This, however, is not the case within commodities,” said Graham Day, SVP and Head of Product and Research. “We believe the Elkhorn Fundamental Commodity Strategy ETF is an important development in offering investors a more thoughtful way to invest in a broad, diversified basket of commodities.”
Source: ETFWorld.com
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