New Listing

LGIM launches commodity ex-agriculture and livestock ETF

Multi-factor approach captures seasonality benefits of commodities

Lauren Gibbons

Aanand Venkatramanan

Legal & General Investment Management (LGIM) has launched a multi-factor commodity ETF that excludes agriculture and livestock, ETF Stream can reveal.

The L&G Multi-Strategy Enhanced Commodities ex-Agriculture & Livestock UCITS ETF (XAGR) is listed on the London Stock Exchange, Deutsche Boerse, SIX Swiss Exchange and Euronext Milan with a total expense ratio (TER) of 0.30%.

XAGR tracks the Barclays Backwardation Tilt Multi-Strategy ex Agriculture & Livestock Capped Total Return index which offers exposure to energy, precious metals and industrial metals.

The index adopts a multi-factor strategy that rolls futures contracts “dynamically” while excluding agriculture and livestock commodities.

XAGR allows investors to benefit from opportunities in certain commodities such as seasonal risks.

Due to base metals and energy commodities being heavily influenced by global growth demand, geopolitical risks and other variables, Aanand Venkatramanan, head of ETFs at LGIM, told ETF Stream this can lead to a “backwardation in their pricing curves, where spot prices are high but future prices decline”.

“These curves can shift quickly, flipping when spot prices drop and future prices rise, creating opportunities to select contracts with the most attractive carry or roll yield," Venkatramanan (pictured) said.

“This allows investors to position themselves where the return from carrying the commodity is most beneficial.”

The launch builds on LGIM’s broader range of commodities ETFs, which includes the L&G All Commodities UCITS ETF (BCOG) and the L&G Longer Dated All Commodities UCITS ETF (CMFP).

Earlier this month, LGIM launched an energy transition ETF that captures metals, transition energy and carbon emissions pricing.

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