Commodities can play several roles in a portfolio with the potential for diversification, inflation hedging and growth opportunities.
An investment in this fund is an acquisition of units in a passively managed, index tracking fund rather than in the underlying assets owned by the fund. Costs may increase or decrease as result of currency and exchange rate fluctuations. Consult the legal documents for further information on costs. This may partly be the result of changes in exchange rates. Investors may not get back the full amount invested.
The Funds intend to invest in securities of issuers that manage their ESG exposures better relative to their peers. This may affect the Funds' exposure to certain issuers and cause the Funds to forego certain investment opportunities. The Funds may perform differently to other funds, including underperforming other funds that do not seek to invest in securities of issuers based on their ESG ratings.
Article 8 and 9 SFDR ETF: Any investment decision should take into account all the characteristics of the fund as described in the legal documents. For sustainability related aspects, please refer to invescomanagementcompany.ie/dub-manco.
Article 6 SFDR ETF: Whilst the fund manager considers ESG aspects they are not bound by any specific ESG criteria and have the flexibility to invest across the ESG spectrum from best to worst in class. The ESG information is for illustrative purposes only. Providing this information is not indicative of how or whether ESG factors will be integrated into a fund. Unless otherwise stated in the legal offering documents ESG integration does not change a Fund’s investment objective or constrain the Fund’s investable universe.
Read the risks warnings at the end of this webpage.
Seeking exposure to commodities can provide your portfolio with an allocation to diverse asset class1
1. Diversification does not guarantee a profit or eliminate the risk of loss
Allocating to commodities can offer a hedge against inflation
Integrating commodities into your investment strategy may offer the opportunity to pursue potential returns
Low-carbon strategies are common in equity and fixed income investing, using corporate emissions to weight or select securities. Commodities present a greater challenge, however, because they have multiple producers, various processes and delivery methods, to name a few. Incorporating environmental considerations into a commodity fund requires a different approach.
Our Invesco Bloomberg Commodity Carbon Tilted UCITS ETF tracks a novel index that tilts weightings towards those commodities with lower greenhouse gas (GHG) emissions in their production process, relative to other commodities within their sector, whilst reducing exposure to those with higher GHG emissions.
We offer a range of broad commodity ETFs and single commodity ETCs, including the largest physical gold product and the largest ETF tracking the flagship Bloomberg Commodity Index (BCOM) in Europe.1
Our ETF tracks an index comprised of the same 24 commodities as the standard BCOM index but adjusts allocation to each commodity based on the amount of greenhouse gas (GHG) emissions per unit of production, whilst maintaining similar weightings at the overall sector level compared to the standard BCOM index.
Our ETF tracks the highly liquid and diversified BCOM, one of the most popular broad commodity indices, covering up to 24 eligible agriculture, livestock, metals and energy-related commodities.
Our ETF tracks the Bloomberg Commodity ex-Agriculture and Livestock 20/30 capped Index, comprised of 13 commodities across energy, industrial metals, and precious metals.
Our ETF offers high quality and tradable exposure to global commodity markets by tracking the Solactive Commodity Composite Index. The index comprises a minimum of three constituent indices (it currently includes four 2nd generation broad commodity indices).
Secured by gold bullion, our ETC provides one of the lowest overall cost exposures to the gold price in Europe, enabling you to gain exposure to gold price movements without having to buy and store physical gold yourself. Our ETC aims to hold only gold that has been sourced post-2012, in adherence to the LBMA’s Responsible Gold Guidance.
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We’ve been managing commodity ETFs since 2006 and are one of the leading providers of commodity exchange traded products globally. Our ETPs are managed by a seasoned team of commodity portfolio managers, with an average industry experience of over 20 years.
With over US$26Bn in broad commodity assets globally2
Targets a 20% reduction in implied GHG emissions per unit of production
One of Europe’s largest and most cost-efficient
gold ETCs2
An introduction to commodities
The most popular way most investors gain exposure to commodities is through exchange-traded products. You can gain exposure to a single commodity’s price via an exchange-traded commodity (ETC) or to a basket of commodities, such as those represented by the BCOM Index, via an ETF.
Monthly gold update
Find out why the gold price rose in December, with insights into the key macro events and what we think you should be keeping your eyes on in the near term.
Commodities are generally raw materials and can be grouped into energy (e.g. crude oil, natural gas), metals (e.g. gold, aluminium, copper) and agricultural commodities (e.g. corn, cotton, live cattle).
Commodity indices typically measure commodity futures performance. Futures are contracts to receive (or deliver) commodities at a specified future date and price.
Direct (physical) investing in many commodities is challenging for many reasons, e.g. cost of storage, delivery, and so on. So, by investing in futures contracts, you can gain exposure to commodities without having to own the physical underlying asset and the difficulties that come with it.
A 1st generation index, like BCOM, uses the most actively traded front month futures (holds a single future until expiry and then rolls into a new future) contracts to gain exposure to each commodity. A 2nd generation index may invest in other delivery months, with the objective of minimising ‘roll costs’.
As measured by inflation beta3 from 1998 to 2022, commodities are historically the most efficient hedge for inflation of any major asset class, even when compared to common inflation-fighting instruments, like Treasury Inflation-Protected Securities (TIPS),4 real estate investments trusts (REITs), 5 and gold.6 This is because commodities are raw materials used as inputs in housing, transportation and food – all components of the CPI. In addition, inflation shocks are usually the by-product of stronger-than-expected demand and/or supply uncertainty, all of which may boost the price of goods.
Given the global reach of commodities, commodity prices have many drivers. However, some of the key influencing factors include:
Greenhouse gases (GHG) are naturally occurring in the atmosphere, which absorbs and re-emits heat, contributing to the warming of the earth. Examples include carbon dioxide and methane. Carbon is a chemical element that is present in many, but not all, greenhouse gases. For the purposes of analysing what investors understand as the ‘carbon footprint’ of a commodity portfolio, GHG emissions data provides a representative metric.
These are physically backed exchange traded certificates (ETCs) that can be bought and sold on exchange. Certificates in the ETCs are a type of debt instrument and are secured by a pool of collateral (the underlying precious metal), which is held on trust by the trustee for itself, the certificate holders and other parties.
1. Invesco, as at 30 June 2023.
2. Invesco, as at 30 June 2023.
3. Inflation beta is a metric used to evaluate an asset class’s ability to hedge inflation. It measures the change in inflation against the return of the asset class over a specific time period.
4. The value of inflation-linked securities will fluctuate in response to changes in real interest rates, generally decreasing when real interest rates rise and increasing when real interest rates fall. Interest payments on such securities generally vary up or down along with the rate of inflation. Real interest rates represent nominal (or stated) interest rates reduced by the expected impact of inflation.
5. REITs are pooled investment vehicles that trade like stocks and invest substantially all their assets in real estate and may qualify for special tax considerations. REITs are subject to risks inherent in the direct ownership of real estate. A company’s failure to qualify as a REIT under federal tax law may have adverse consequences for the REIT’s shareholders. REITs may have expenses, including advisory and administration, and REIT shareholders will incur a proportionate share of the underlying expenses.
6. Bloomberg L.P. and US Bureau of Labor Statistics, as of December 2022.
For complete information on risks, refer to the legal documents.
The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested.
Commodities: Instruments providing exposure to commodities are generally considered to be high risk which means there is a greater risk of large fluctuations in the value of the instrument.
For all ETFs in the Invesco Broad Commodity ETF range: The fund might purchase securities that are not contained in the reference index and will enter into swap agreements to exchange the performance of those securities for the performance of the reference index. The Fund’s ability to track the benchmark’s performance is reliant on the counterparties to continuously deliver the performance of the benchmark in line with the swap agreements and would also be affected by any spread between the pricing of the swaps and the pricing of the benchmark. The insolvency of any institutions providing services such as safekeeping of assets or acting as counterparty to derivatives or other instruments, may expose the Fund to financial loss.
Invesco Bloomberg Commodity UCITS ETF EUR HDG: Currency hedging between the base currency of the Fund and the currency of the share class may not completely eliminate the currency risk between those two currencies and may affect the performance of the share class.
For all ETCs in the Invesco Precious Metal ETC range only: If the issuer cannot pay the specified return, the proceeds from the sale of the precious metal will be used to repay investors. Investors will have no claim on the other assets of the issuer.
Invesco Physical Gold Euro Hedged ETC, Invesco Physical Gold GBP Hedged ETC only: Currency hedging between the currency in which the underlying precious metal is typically quoted and the currency of the certificates may not completely eliminate the currency fluctuations between those two currencies and may affect the performance of the certificates.
Invesco Bloomberg Commodity Carbon Tilted UCITS ETF: Exposure to commodities might result in the Fund being more impacted by natural disasters and tariffs or other regulatory developments. This may result in large fluctuations in the value of the Fund. The Fund may perform differently to other commodity funds, such as underperforming in comparison to other commodity funds that do not seek to weight commodity futures based on their respective GHG Emissions.
This marketing communication is exclusively for use by Qualified Clients/Sophisticated Investors in Israel. It is not intended for and should not be distributed to the public. Investors should read the legal documents prior to investing.
Data as at 31 January 2024, unless otherwise stated.
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This is marketing material and not financial advice. It is not intended as a recommendation to buy or sell any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication.
Views and opinions are based on current market conditions and are subject to change.
For more information on our funds and the relevant risks, please refer to the share class-specific Key Information Documents/Key Investor Information Documents (available in local language), the financial statements and the Prospectus, available from invesco.eu. A summary of investor rights is available in English from invescomanagementcompany.ie/dub-manco. The management company may terminate marketing arrangements.
UCITS ETF’s units / shares purchased on the secondary market cannot usually be sold directly back to UCITS ETF. Investors must buy and sell units / shares on a secondary market with the assistance of an intermediary (e.g. a stockbroker) and may incur fees for doing so. In addition, investors may pay more than the current net asset value when buying units / shares and may receive less than the current net asset value when selling them.
The Invesco Commodity Composite UCITS ETF is not sponsored, promoted, sold or supported in any other manner by Solactive AG nor does Solactive AG offer any express or implicit guarantee or assurance either with regard to the results of using the Solactive Commodity Composite Index and/or Index trade mark or the Index Price at any time or in any other respect. The Index is calculated and published by Solactive AG.
Bloomberg Commodity Total Return Index, Bloomberg ex-Agriculture and Livestock 20/30 Capped Total Return Index and “Bloomberg®” are service marks of Bloomberg Finance L.P. and its affiliates (collectively, “Bloomberg”) and have been licensed for use for certain purposes by Invesco. Neither Bloomberg nor UBS Securities LLC and its affiliates (collectively, “UBS”) are affiliated with Invesco, and Bloomberg and UBS do not approve, endorse, review, or recommend the ETF. Neither Bloomberg nor UBS guarantees the timeliness, accurateness, or completeness of any data or information relating to the Bloomberg Commodity Total Return Index, Bloomberg ex-Agriculture and Livestock 20/30 Capped Total Return Index.
“Bloomberg®” and “Bloomberg Commodity Carbon Tilted IndexSM“ are service marks of Bloomberg Finance L.P. and its affiliates, including Bloomberg Index Services Limited (“BISL”), the administrator of the indices (collectively, “Bloomberg”) and have been licensed for use for certain purposes by Invesco UK Services Limited (“Invesco”). Bloomberg is not affiliated with Invesco, and Bloomberg does not approve, endorse, review, or recommend Invesco Bloomberg Commodity Carbon Tilted UCITS ETF. Bloomberg does not guarantee the timeliness, accurateness, or completeness of any data or information relating to Bloomberg Commodity Carbon Tilted Index.
No action has been taken or will be taken in Israel that would permit a public offering of the Fund or distribution of this document to the public. This Fund has not been approved by the Israel Securities Authority (the ISA). The Fund shall only be sold in Israel to an investor of the type listed in the First Schedule to the Israeli Securities Law, 1968, who in each case have provided written confirmation that they qualify as Sophisticated Investors, and that they are aware of the consequences of such designation and agree thereto and further that the Fund is being purchased for its own account and not for the purpose of re-sale or distribution other than, in the case of an offeree which is an Sophisticated Investor, where such offeree is purchasing product for another party which is an Sophisticated Investor. This document may not be reproduced or used for any other purpose, nor be furnished to any other person other than those to whom copies have been sent. Nothing in this document should be considered investment advice or investment marketing as defined in the Regulation of Investment Advice, Investment Marketing and Portfolio Management Law, 1995 (“the Investment Advice Law”). Neither Invesco Ltd. nor its subsidiaries are licensed under the Investment Advice Law, nor does it carry the insurance as required of a licensee thereunder. This document does not constitute an offer to sell or solicitation of an offer to buy any securities or fund units other than the fund offered hereby, nor does it constitute an offer to sell to or solicitation of an offer to buy from any person in any state or other jurisdiction in which such offer or solicitation would be unlawful, or in which the person making such offer or solicitation is not qualified to do so, or to a person to whom it is unlawful to make such offer or solicitation.
For the full objectives and investment policy please consult the current prospectus.
Invesco Investment Management Limited, Ground Floor, 2 Cumberland Place, Fenian Street, Dublin 2, Ireland. Regulated by the Central Bank in Ireland.
EMEA3362325/2024
