GraniteShares, begun two new Commodity ETFs, the GraniteShares Bloomberg Commodity Broad Strategy No K-1 ETF (NyseArca: COMB) and the
GraniteShares S&P GSCI Commodity Broad Strategy No K-1 ETF (NyseArca: COMG) on Monday, May 22, 2017. Here is a synopsis of the new ETFs:
1.
FUND INFORMATION:
| Symbol: COMB | Exchange: NYSE ARCA |
| Name: GraniteShares Bloomberg Commodity Broad Strategy No K-1 ETF | Net Expense Ratio: 0.25% |
FUND OBJECTIVE:
The GraniteShares Bloomberg Commodity Broad Strategy No K-1 ETF is an actively managed ETF that seeks to provide long-term capital appreciation, primarily through exposure to commodity futures markets.
The Fund’s investment strategy is based in part on the Bloomberg Commodity Index (BCOM Benchmark), which is designed to be a highly liquid and broad benchmark for commodities futures investments. The BCOM Benchmark provides broad-based exposure to commodities as an asset class, since no single commodity or commodity sector dominates the BCOM Benchmark. The weightings of the components of the BCOM Benchmark are based on (1) liquidity data, which is the relative amount of trading activity of a particular commodity; (2) production data, which measures the importance of a commodity to the world economy; and (3) diversification rules that attempt to reduce disproportionate weightings of any single commodity. Rather than being driven by micro-economic events affecting one commodity market or sector, the BCOM Benchmark is comprised of futures contracts on a broad basket of underlying commodities, which potentially reduces volatility in comparison with narrower commodity baskets.
Currently, the BCOM Benchmark consists of 22 commodities futures contracts with respect to 20 commodities: aluminum, coffee, copper, corn, cotton, crude oil (WTI and Brent), gold, ULS Diesel, lean hogs, live cattle, natural gas, nickel, silver, soybean meal, soybean oil, soybeans, sugar, unleaded gas, wheat (Chicago and KC HRW), and zinc. The BCOM Benchmark reflects the return from these commodity futures contracts.
The Fund is called “No K1” because it is designed to operate differently than commodity-based exchange traded funds that distribute a “Schedule K-1” to shareholders. Schedule K-1 is a tax document that contains information regarding a fund’s income and expenses. Schedule K-1 is a complex form and shareholders may find that preparing tax returns requires additional time or the assistance of a professional tax adviser, at additional expense to the shareholder. In contrast, the Fund is designed to be taxed like a conventional mutual fund and therefore will deliver a “Form 1099” to investors, from which income, gains, and losses can be entered onto the investor’s tax return. To deliver 1099s consistent with applicable tax law, the Fund currently expects to invest in an underlying subsidiary, as discussed below.
The Fund expects initially to gain exposure to the commodity futures markets by investing in commodity futures contracts (Commodity Futures). The Fund does not expect to invest directly in Commodity Futures. The Fund expects to gain exposure to these investments by investing a portion of its assets in the GraniteShares BCOM Cayman Limited, a wholly-owned subsidiary of the Fund organized under the laws of the Cayman Islands (the “Subsidiary”). The Subsidiary is advised by the Adviser, and the Adviser complies with the provisions of the Investment Company Act of 1940 relating to advisory contracts. Unlike the Fund, the Subsidiary is not an investment company registered under the Investment Company Act of 1940 (the 1940 Act). The Fund’s investment in the Subsidiary is intended to provide the Fund with exposure to commodity futures markets in accordance with applicable rules and regulations. The Subsidiary has the same investment objective and will follow the same general investment policies and restrictions as the Fund. The Fund will invest up to 25% of its total assets in the Subsidiary. The Fund complies with the provisions of the 1940 Act governing capital structure and leverage (Section 18) on an aggregate basis with the Subsidiary. Except as otherwise noted, references tothe Fund’s investment strategies and risks include the investment strategies and risks of the Subsidiary.
Top Benchmark Holdings (03/31/17):
| Gold | 11.93% |
| Copper | 7.92% |
| Natural Gas | 7.75% |
| Corn | 7.55% |
| Brent Crude | 7.38% |
| WTI Crude Oil | 6.63% |
| Soybeans | 5.56% |
| Aluminum | 5.24% |
| Silver | 4.55% |
| RBOB Gasoline | 3.87% |
Index Sector Allocation (03/31/17):
| ENERGY | 29.14% |
| PRECIOUS METALS | 16.48% |
| INDUSTRIAL METALS | 18.49% |
| AGRICULTURE | 29.62% |
| LIVESTOCK | 6.27% |
Useful Links:
COMB Home Page
2.
FUND INFORMATION:
| Symbol: COMG | Exchange: NYSE ARCA |
| Name: GraniteShares S&P GSCI Commodity Broad Strategy No K-1 ETF | Net Expense Ratio: 0.35% |
FUND OBJECTIVE:
The GraniteShares S&P GSCI Commodity Broad Strategy No K-1 ETF is an actively managed ETF that seeks to provide long-term capital appreciation, primarily through exposure to commodity futures markets. The Fund’s investment strategy is based in part on the S&P GSCI Index (GSCI Benchmark), which is designed to be measure of commodity market performance over time. The commodity futures contracts represented in the GSCI Benchmark are weighted based on global production values to reflect the relative significance of the physical commodities underlying such commodity futures contracts to the world economy.
Currently, the GSCI Benchmark consists of 24 commodities futures contracts with respect to 22 commodities: crude oil (WTI and Brent), corn, live cattle, wheat (Chicago and Kansas), heating oil, gasoil, gold, copper, RBOB gasoline, soybeans, natural gas, aluminum, lean hogs, sugar, cotton, feeder cattle, coffee, zinc, lead, nickel, cocoa and silver. The GSCI Benchmark reflects the return from these commodity futures contracts.
While the Fund generally will seek exposure to the commodity futures markets included in the GSCI Benchmark, the Fund is not an index tracking ETF and will seek to improve its performance, in part through a cash management strategy consisting of investments in investment grade fixed income securities issued by various U.S. public-sector or corporate entities (Fixed Income Securities). The Adviser will use such instruments to generate a total return for investors and exercise its discretion in the use of such instruments to seek to optimize the investment performance of the Fund. In addition, the Fund at times may actively select investments with differing maturities from the underlying components of the GSCI Benchmark, may not invest in all of the GSCI Benchmark’s components or in the same proportion as the GSCI Benchmark, may invest in commodity-linked derivative instruments and other commodity-linked instruments outside the GSCI Benchmark, and may emphasize some commodity sectors more than others.
The Fund is called “No K1” because it is designed to operate differently than commodity-based exchange traded funds that distribute to shareholders a “Schedule K-1.” Schedule K-1 is a tax document that contains information regarding a fund’s income and expenses. Schedule K-1 is a complex form and shareholders may find that preparing tax returns requires additional time or the assistance of a professional tax adviser, at additional expense to the shareholder. In contrast, the Fund is designed to be taxed like a conventional mutual fund and therefore will deliver a “Form 1099” to investors, from which income, gains, and losses can be entered onto the investor’s tax return. To deliver 1099s consistent with applicable tax law, the Fund currently expects to invest in an underlying subsidiary, as discussed below.
The Fund will gain exposure to the commodity futures markets by investing initially in commodity futures contracts (Commodity Futures). The Fund does not expect to invest directly in Commodity Futures. The Fund expects to gain exposure to these investments by investing a portion of its assets in the GraniteShares GSCI Cayman Limited, a wholly-owned subsidiary of the Fund organized under the laws of the Cayman Islands (Subsidiary). The Subsidiary is advised by the Adviser, and the Adviser complies with the provisions of the Investment Company Act of 1940 relating to advisory contracts. Unlike the Fund, the Subsidiary is not an investment company registered under the Investment Company Act of 1940 (1940 Act). The Fund’s investment in the Subsidiary is intended to provide the Fund with exposure to commodity futures markets in accordance with applicable rules and regulations. The Subsidiary has the same investment objective and will follow the same general investment policies and restrictions as the Fund. The Fund will invest up to 25% of its total assets in the Subsidiary. The Fund complies with the provisions of the 1940 Act governing capital structure and leverage (Section 18) on an aggregate basis with the Subsidiary. Except as otherwise noted, references to the Fund’s investment strategies and risks include the investment strategies and risks of the Subsidiary.
Top Benchmark Holdings (03/31/17):
| WTI Crude Oil | 24.06% |
| Brent Crude | 17.48% |
| GasOil | 5.08% |
| Unleaded Gasoline | 5.05% |
| Corn | 4.80% |
| Copper | 4.32% |
| Heating Oil | 4.21% |
| Gold | 4.00% |
| Live Cattle | 3.96% |
| Natural Gas | 3.91% |
Index Sector Allocation (03/31/17):
| ENERGY | 59.80% |
| PRECIOUS METALS | 4.54% |
| INDUSTRIAL METALS | 10.71% |
| AGRICULTURE | 17.39% |
| LIVESTOCK | 7.56% |
Useful Links:
COMG Home Page
ETFtrack comment:
Here is a comment from William Rhind, the established ETF entrepreneur, Founder and CEO of GraniteShares:
“With these new ETFs, COMB and COMG, we’re aiming to re-establish the benchmarks for commodity investing in the United States. We feel investors have been overpaying for commodity ETFs for too long. GraniteShares wants to change that. Investors can now access funds with benchmarks to the Bloomberg Commodity and S&P GSCI indexes.”
About GraniteShares
GraniteShares is an independent, fully funded ETF company headquartered in New York City. The firm seeks to launch disruptive ETFs. GraniteShares’ focus is on products that bring the excitement back to investing, using new ideas, innovative structures and low cost. William Rhind, Founder and CEO, is an established ETF entrepreneur with more than 16 years of experience in the industry.