ETFs

Commodity ETFs

Commodities can play several roles in a portfolio with the potential for diversification, inflation hedging and growth opportunities.

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US$20 bn Assets in commodity products

We are one of the largest providers of commodity exchange-traded products in Europe.i

15yrs Of commodity expertise

For over 15 years, we have offered products that provide exposure to the commodities marketii

1st Article 8 broad commodity ETF

Our innovative carbon tilted ETF targets a 20% reduction in implied GHG emissions per unit of production.iii

  • Notes

    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.

     

Cost-efficient access to commodities

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.

An investment in these funds is an acquisition of units in a passively managed, index tracking fund rather than in the underlying assets owned by the fund.

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.

Our ETCs offer you exposure to either the spot silver, platinum or palladium price through certificates backed by bullion of the underlying precious metals, which are secured in J.P. Morgan Chase Bank’s London Vaults.
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Article
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.

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Transcript

FAQs

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. 

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:

  • Global economic health: The health of the global economy can directly impact the supply and demand of commodities, influencing prices. In particular, developments in China and the US often have an outsized influence as they are the world’s two largest global economies by gross domestic product (GDP), which measures the total value of a country's finished goods and services.

  • Green transition and climate volatility: Contrary to popular belief, the energy transition/decarbonisation trend is supportive of commodity prices. Metals, like copper, aluminium, zinc and nickel are playing a significant role in the transition to renewable energy, yet efforts to reduce carbon emissions are significantly constraining supplies. This combination of growing demand and tightening supply could potentially create sustained global deficits in the metals sector for years — possibly decades — to come.

    The growing application of environmental, social, and governance (ESG) considerations in investment solutions has also led to significant underinvestment in fossil fuels, such as oil and gas, stunting supply growth while global demand continues to climb. Extreme weather events may continue to upend supplies in the agricultural sector. Furthermore, there may be increased demand for agricultural commodities to be used as ‘energy crops' for ethanol and biodiesel.

  • Geopolitics: Rising geopolitical tension, especially between significant players in this market, can lead to heightened uncertainty and volatility for prices, as we saw play out following Russia’s invasion of Ukraine. Tensions between the US and China have also been rising, which could potentially rewrite existing global trade routes.

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.

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  • Footnotes

    i Source: Invesco, total AUM in commodity ETFs and precious metal ETCs domiciled in Europe, as at 30 September 2024.

    ii Source: Invesco, Bloomberg. Invesco Physical Gold ETC launched 24 June 2009.

    iii Source: Bloomberg Professional Services, Index Methodology: Bloomberg Commodity Carbon Tilted Indices, May 2023.

    Any investment decision should take into account all the characteristics of the funds as described in the legal documents. For sustainability related aspects, please refer to  https://www.invescomanagementcompany.ie/dub-manco. An investment in these ETFs is an acquisition of units in a passively managed, index tracking fund rather than in the underlying assets owned by the ETFs 

    1 Invesco, as at 30 September 2024.

    2 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.

    3 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.

    4 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.

    5 Sources: Bloomberg L.P. and US Bureau of Labor Statistics, as of December 2022.

    Investment risks

    For complete information on risks, refer to the legal documents.

    Value fluctuation:     The value of investments, and any income from them, will fluctuate. This may partly be the result of changes in exchange rates. 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 ETCs in the Invesco Precious Metal ETC range only

    Limited recourse: 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.

    For all ETFs in the Invesco Broad Commodity ETF range

    Synthetic ETF Risk: 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.

    Use of derivatives for index tracking: 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.

    For the Invesco Bloomberg Commodity UCITS ETF EUR hdg only

    Currency Hedging - ETFs: 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 the Invesco Physical Gold Euro Hedged ETC and Invesco Physical Gold GBP Hedged ETC only

    Currency hedging - ETCs: 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.

    For the Invesco Bloomberg Commodity Carbon Tilted UCITS ETF only

    New commodity risk: 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.

    GHG Emissions risk: 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.

    Important Information

    Data as at 30 September 2024, unless otherwise stated.

    For information on our funds and the relevant risks, refer to the Key Information Documents/Key Investor Information Documents (local languages) and Prospectus (English, French, German), and the financial reports, available from www.invesco.eu. A summary of investor rights is available in English from www.invescomanagementcompany.ie. The management company may terminate marketing arrangements.

    All investment decisions must be based only on the most up to date legal offering documents. The legal offering documents (Key Information Document (KID), Base Prospectus and financial statements) are available free of charge at our website www.invesco.eu and from the issuers.

    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.

    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.

    “BLOOMBERG®” and the Bloomberg indices listed herein (the “Indices”) 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 Markets plc hereof (the “Licensee”). Bloomberg is not affiliated with Licensee, and Bloomberg does not approve, endorse, review, or recommend the fund named herein (the “Fund”). Bloomberg does not guarantee the timeliness, accuracy, or completeness of any data or information relating to the Funds.

    For the full objectives and investment policy please consult the current prospectus.

    This document has been communicated by Invesco Investment Management Limited, Ground Floor, 2 Cumberland Place, Fenian Street, Dublin 2, Ireland, Regulated by the Central Bank in Ireland.

    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.

    This communication has not been approved by the Israeli Securities Authority and will only be distributed to Israeli residents in a manner that will not constitute "an offer to the public" under sections 15 and 15A of the Israel Securities Law, 5728-1968 ("the Securities Law"). The product is being offered to a limited number of investors (35 investors or fewer during any given 12 month period) and/or those categories of investors listed in section 15A(b) of and/or the First Addendum ("the Addendum") to the Securities Law, ("Sophisticated Investors") each as defined in the said Addendum, as amended from time to time, and 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; in all cases under circumstances that will fall within the private placement or other exemptions of, the Securities Law and any applicable guidelines, pronouncements or rulings issued from time to time by the Israeli Securities Authority. This communication 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. Any offeree who purchases a product is purchasing such product for its own benefit and account and not with the aim or intention of distributing or offering such product to other parties (other than, in the case of an offeree which is an Sophisticated Investor by virtue of it being a banking corporation, portfolio manager or member of the Tel-Aviv Stock Exchange, as defined in the Addendum, where such offeree is purchasing product for another party which is an Sophisticated Investor). Nothing in this communication should be considered Investment Advice or Investment Marketing defined in the Regulation of Investment Counselling, Investment Marketing and Portfolio Management Law, 5755-1995 (“the Investment Advice Law”). Investors are encouraged to seek competent investment counselling from a locally licensed investment counsel prior to making the investment. Neither Invesco Ltd. nor its subsidiaries does not hold a licence under the Investment Advice Law, nor does it carry the insurance as required of a licensee thereunder. This communication does not constitute an offer to sell or solicitation of an offer to buy any securities other than the product offered hereby, nor does it constitute an offer to sell to or solicitation of an offer to buy from any person or persons 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 or persons to whom it is unlawful to make such offer or solicitation.

    EMEA3933938/2024
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