First Trust Launches Commodities ETF

Oct 21 2013 | 10:22am ET

First Trust Advisors is launching an actively managed commodities exchange-traded fund.

The First Trust Global Tactical Commodity Strategy Fund, which begins trading on the NASDAQ on October 23, will provide investors with commodity exposure while seeking a relatively stable risk profile by investing up to 25% of its total assets in commodity futures contracts and exchange-traded commodity linked instruments through a wholly-owned subsidiary of the fund. Remaining assets will be invested primarily in short-term investment-grade fixed-income securities, money-market instruments, ETFs and other investment companies, cash and other cash equivalents.

FTGC will be managed by senior portfolio managers Rob Guttschow and John Gambla.

To combat the volatility inherent in commodities investments, First Trust said the weightings of the underlying commodities instruments will be actively managed and rebalanced in an attempt to stabilize risk levels.

“Commodity investments have traditionally provided investors with attractive total returns and strong diversification characteristics, especially during periods of high inflation,” said Guttschow, in a statement. “By tactically rotating between different commodity investments and managing the overall portfolio volatility, the fund may provide investors commodity exposure in a more attractive manner. Additionally, by attempting to pick the most attractive maturity futures contract for each commodity, FTGC may provide higher returns over a market cycle.”

First Trust and its affiliate, First Trust Portfolios, are privately-held companies providing a variety of investment services with collective assets under management or supervision of approximately $76 billion as of September 30, 2013. First Trust is based in Wheaton, Illinois.

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