UBS Asset Management has launched a commodity futures ETF that seeks to capitalise on carry trades.
The UBS CMCI Commodity Carry Ex-Agriculture SF UCITS ETF (UBF6) is listed on Deutsche Boerse and Boerse Frankfurt with a total expense ratio (TER) of 0.34%.
Synthetically-replicated, UBF6 tracks the UBS Bloomberg CM-BCOM Outperformance Strategy Ex-Precious Metals, Agriculture, Livestock 2.5x Leveraged index.
The index offers exposure to oil and gas futures as well as industrial metals including aluminium, zinc, nickel and copper. Futures on precious metals, livestock and agricultural commodities are excluded.
The ETF simultaneously takes long and short positions on commodities futures, with long and short positions taken on the same commodities but with different maturities.
UBS AM said that the strategy will track the outperformance of the CMIC rolling methodology using daily rolling and tenor diversification which has delivered positive returns in all but one year since its 2007 launch.
The firm added: “The aim is to maximise the roll yield. Carry trades are trading strategies that exploit interest rate or, as in this case, time value differences.”
UBS AM has also launched a euro-hedged version, the UBS CMCI Commodity Carry Ex-Agriculture SF UCITS ETF (hedged to EUR).