Industry Updates

LGIM shuts flailing commodities ETF as clients seek to diversify

ETF launched in 2017 has recorded consistent outflows

Theo Andrew

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Legal & General Investment Management (LGIM) has closed its commodities ex-livestock and agriculture ETF after its clients called for a more diverse exposure, ETF Stream can reveal.

The L&G Longer Dated All Commodities ex-Agriculture and Livestock UCITS ETF (XAGS) launched in 2017 but consistent outflows has seen it shrink by $12m in three years to just over $1m assets under management (AUM).

As a result, LGIM said it decided to close the ETF “based on prevailing market sentiment and client feedback”.

“We are constantly evolving our fund range, and as part of the ongoing review process, we are aiming to prioritise solutions that currently resonate most with clients,” it said.

The firm launched the L&G Multi-Strategy Enhanced Commodities UCITS ETF (ENCG) in July – which currently has $471m AUM – in a bid to offer investors a more diversified approach to commodities. 

ENCG offers investors exposure to the commodities futures market as it invests across different commodities throughout the market cycle.

ENCG, which tracks the Barclays Backwardation Tilt Multi-Strategy Capped Total Return index, currently has a 30.1% exposure to agriculture and 4.7% exposure to livestock, both of which are excluded from XAGS.

The ETF has five commodity groups comprising of energy (48%), agriculture, industrial metals (8.7%), precious metals (8.2%) and livestock.

XAGS, which was launched as a variation on the $683m L&G Longer Dated All Commodities UCITS ETS (COMF), tracks the 12 constituents of the Bloomberg ex-Agriculture & Livestock 15/30 Capped 3 Month Forward index, versus the 23 of ENCG, and has returned 39.9% over three years.

COMF, which tracks the Bloomberg Commodity Index 3 Month Forward index, has returned 39.5% and is very similar in its composition to ENCG. Both have total expense ratios (TER) of 0.30%.

In a market announcement, LGIM said XAGS will be officially delisted from the Financial Conduct Authority’s list on 19 January, with a compulsory redemption date for investors of 14 January.

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