iShares Launches the iShares Dow Jones-UBS Roll Select Commodity Index Trust
iShares Launches the iShares Dow Jones-UBS Roll Select Commodity Index Trust
Offers diversified exposure to commodities while seeking to mitigate the effects of 'contango'
SAN FRANCISCO--(BUSINESS WIRE)-- BlackRock, Inc. (NYS: BLK) announced today that its iShares Exchange Traded Funds (ETFs) business, the world's largest manager of ETFs1, has launched the iShares Dow Jones-UBS Roll Select Commodity Index Trust (NYSE Arca: CMDT) on the NYSE Arca. It is the first exchange traded product based on the Dow Jones-UBS Roll Select Commodity Index, which currently tracks 22 commodities futures contracts, including agriculture, energy and metals, and is designed to minimize the costs of closing expiring futures contracts and replacing them for new ones.
"Many investors look to commodities to diversify beyond stocks and bonds, but when investing in commodity funds that typically hold futures contracts, the buying and selling of contracts can detract from fund performance. By using an innovative index the iShares Dow Jones-UBS Roll Select Commodity Index Trust seeks to minimize the costs of changing or 'rolling' futures contracts, enabling the Trust to ultimately provide investors efficient access to diversified commodities," said Ravi Goutam, Head of Americas Product for iShares at BlackRock.
The iShares Dow Jones-UBS Roll Select Commodity Index Trust accesses commodities exposure through commodity index futures contracts. When the contracts are close to expiring, the fund replaces the contracts with new ones. This process is known as "rolling."If the fund is rolling contracts for costlier later-dated contracts then the commodity market is in 'contango', which may detract from performance. If the later-dated contracts are less expensive than the contracts held by the fund, then the commodity market is in 'backwardation', which may add to performance.
The Dow Jones-UBS Roll Select Commodity Index, a version of the Dow Jones-UBS Commodity Index, aims to mitigate the effects of contango on performance. For each commodity, the index rolls into the futures contract that shows the most backwardation or least contango, selecting from those contracts with nine months or fewer until expiration.
The index currently represents 22 commodities futures contracts, which are weighted to account for economic significance and market liquidity. There are weighting restrictions on individual commodities and commodity groups to promote diversification. As of July 31, 2013, the largest sector weightings of the index included energy (38%), agriculture (34%) and metals (28%).
BlackRock is a leader in investment management, risk management and advisory services for institutional and retail clients worldwide. At June 30, 2013, BlackRock's AUM was $3.857 trillion. BlackRock helps clients meet their goals and overcome challenges with a range of products that include separate accounts, mutual funds, iShares®(exchange-traded funds), and other pooled investment vehicles. BlackRock also offers risk management, advisory and enterprise investment system services to a broad base of institutional investors through BlackRock Solutions®. Headquartered in New York City, as of June 30, 2013, the firm has approximately 10,700 employees in 30 countries and a major presence in key global markets, including North and South America, Europe, Asia, Australia and the Middle East and Africa. For additional information, please visit the Company's website at www.blackrock.com.
iShares is a global product leader in exchange traded funds with over 600 funds globally across equities, fixed income and commodities, which trade on 20 exchanges worldwide. The iShares Funds are bought and sold like common stocks on securities exchanges. The iShares Funds are attractive to many individual and institutional investors and financial intermediaries because of their relative low cost, tax efficiency and trading flexibility. Investors can purchase and sell shares through any brokerage firm, financial advisor, or online broker, and hold the funds in any type of brokerage account. The iShares customer base consists of the institutional segment of pension plans and fund managers, as well as the retail segment of financial advisors and high net worth individuals.
The iShares Dow Jones-UBS Roll Select Commodity Index Trust is not a standard ETF. The Trust is not an investment company registered under the Investment Company Act of 1940. Shares of the Trust are not subject to the same regulatory requirements as mutual funds. Investments in shares of the Trust are speculative and involve a high degree of risk. Before making an investment decision, you should carefully consider the risk factors and other information included in the prospectus.
This information must be preceded or accompanied by a current prospectus for the Trust, which can be viewed by clicking here .
The sponsor of the Trust is iShares Delaware Trust Sponsor LLC (the "Sponsor"). BlackRock Investments, LLC ("BRIL"), assists in the promotion of the Trust. The Sponsor and BRIL are affiliates of BlackRock, Inc.
The value of the shares of the Trust depends on the value of Index Futures held by the Trust, which will fluctuate based on the prices of commodity futures contracts reflected in the DJ-UBS Roll Select Commodity Index. These prices may be volatile, thereby creating the potential for losses regardless of the length of time shares of the Trust are held.
Commodity prices are generally affected by, among other factors, the cost of producing, transporting and storing commodities, changes in consumer or commercial demand for commodities, the hedging and trading strategies of producers and consumers of commodities, speculative trading in commodities by commodity pools and other market participants, disruptions in commodity supply, weather, political and other global events, global economic factors and government intervention in or regulation of the commodity or commodity futures markets. These factors cannot be controlled by the Trust. Accordingly, the price of shares of the Trust could change substantially and in a rapid and unpredictable manner. This exposes investors to a potential loss on an investment in the Trust, regardless of the length of the investment. The Trust may not provide anticipated benefits of diversification from other asset classes.
Commodity futures trading may be illiquid. In addition, suspensions or disruptions of market trading in the commodities markets and related futures markets may adversely affect the value of the Trust. Although market makers will generally take advantage of differences between the NAV and the trading price of Trust shares through arbitrage opportunities, there is no guarantee that they will do so. There is no guarantee an active trading market will develop for shares of the Trust, which may result in losses on an investment at the time shares are sold.
The Sponsor has broad discretion to liquidate the Trust at any time. The Trust could be liquidated at a time when the disposition of its interests will result in losses to investors. Shares of the Trust are not deposits or other obligations of or guaranteed by BlackRock, Inc., and its affiliates, and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.
The Shares are not sponsored, endorsed, sold or promoted by Dow Jones or UBS AG or any of their subsidiaries or affiliates. Neither Dow Jones and UBS AG, nor their affiliates, make any representation regarding the advisability of investing in the Trust.
© 2013 BlackRock. All rights reserved. iSHARES® and BLACKROCK® are registered trademarks of BlackRock. All other marks are the property of their respective owners.
* Not FDIC Insured * No Bank Guarantee * May Lose Value
1 Source: BlackRock ETP Landscape Report, May 31, 2013
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