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ETF Securities to list new range of ETCs providing investors with access to a different part of the commodities futures curve
09/10/07
- World first for listed access to an entire platform of forward commodity indices via ETCs
- Response to strong demand for access to longer dated futures
- 9 Index ETCs to track the Dow Jones-AIG Commodity 3 Month Forward Indices
Global pioneer in exchange traded commodities, ETF Securities (ETFS), will deliver another world first by listing nine new Index Exchange Traded Commodities (ETCs) on the London Stock Exchange on Wednesday 10th October- offering investors, for the first time ever, the opportunity to gain direct and simple exposure to commodity futures prices which are linked to the Dow Jones-AIG Commodity 3 Month Forward Indices. Another nineteen Individual ETCs will be listed in the coming months.
The new ETCs will track 28 different individual commodities and baskets of commodities, making a total of two different maturities available. Up to 58 ETCs available, tracking both the Dow Jones-AIG Commodity IndexSM and the DJ-AIGCI 3 Month Forward IndicesSM which were launched by Dow Jones and AIG Financial Products Corp. for the very first time on 28 September 2007.
The first ETCs to track DJ-AIG Commodity Indices were listed on the London Stock Exchange in September 2006. Since then, the existing 29 ETCs tracking DJ-AIG Commodity Indices have accumulated over $1.2 billion in assets. The most popular ETCs have been those tracking precious metals and agriculture, which contribute 70% of ETC assets. Over the past twelve months, the ETCs have been listed on five European stock exchanges including London Stock Exchange, Deutsche Borse, Euronext Paris, Euronext Amsterdam and Borsa Italiana.
Substantial demand from investors for more choice to different parts of the commodity futures curve has led ETF Securities to create these new forward ETCs, providing investors with more choice and allowing investors to implement different investment strategies in commodities. The demand for new ETCs is a result of significant investor interest in commodities and increased knowledge about commodities investing.
The new forward ETCs have historically shown lower volatility while the effects of contango and backwardation also vary between the existing and new ETCs. The new ETCs provide investors with the opportunity to optimise returns by increasing exposure to backwardation or decreasing exposure to contango. Investors have been searching for a means to expose their portfolio to the benefits of backwardation* which can provide a source of return in addition to the commodities price return. Due to the dynamic nature of backwardation and contango, investors wish to be able to track different commodity futures dependent on this feature.
First dealings in these securities is expected to commence on the London Stock Exchange tomorrow.
Commenting on launching another world first, Graham Tuckwell, Chairman of ETF Securities, said:
"ETCs have now been available in Europe since December 2003 and their simplicity and structure have now been embraced by the market. Many investors have approached us showing an appetite for ETCs priced off a range of commodities futures. Increased investor demand and knowledge has resulted in investors wanting access to more choice and alternative trading and investment strategies.
"Overall there has been a huge surge in global demand for ETCs and we recently passed the landmark of US $1.7 billion invested in our existing offering of 42 different ETCs. With listings on five of Europe's major exchanges ETF Securities has successfully delivered simple, cost-efficient and accessible products for all investors."
"With the new range of Forward ETCs, ETF Securities is continuing its leadership of the ETC market having previously delivered platforms of five physically backed precious metal ETCs, 8 oil ETCs backed by Shell and 29 commodity ETCs on 5 major stock exchanges.
David Shrimpton, Head of Product Management and Development at the London Stock Exchange, said:
"I am delighted to welcome these innovative new forward-based Exchange Traded Commodities to our market. By offering investors greater choice and flexibility in their commodities trading strategies, I am sure that they will contribute to the growth of our dedicated Exchange Traded Commodities market which has already seen nearly £4.5 billion worth of trading since its launch just over a year ago".
* 'Backwardation' and 'contango' - definitions:
Backwardation refers to a downward sloping forward curve (as in an inverted yield curve) or, more formally, it is the situation where, and the amount by which, the price of a commodity for future delivery is lower than the spot price, or a far future delivery price lower than a nearer future delivery.
Contango is the opposite to 'backwardation' and refers to an upward sloping forward curve (as in the normal yield curve) in prices or, more formally, it is the situation where, and the amount by which, the price of a commodity for future delivery is higher than the spot price, or a far future delivery price higher than a nearer future delivery.
For further information, please contact:
Roman Townsend / John Kelly
Penrose Financial
Tel: +44 (0) 20 7786 4875 / 4821
Notes to editors:
The management of ETF Securities Limited pioneered the development of Exchange Traded Commodities (ETCs), in 2003. Building on its success ETF Securities created the world's first entire ETC platform which was listed on the London Stock Exchange in September 2006. Since then, ETF Securities has listed its entire range of 42 ETCs on Europe's major exchanges (Frankfurt, Paris, Amsterdam and Italy) with each exchange creating a separate ETC segment.
To learn more about ETF Securities go to: www.etfsecurities.com
The Dow Jones - AIG Commodity IndexSM(DJ-AIGCISM) and The Dow Jones - AIG Commodity 3 Month Forward IndexesSM(DJ-AIGCI-F3SM) are designed to be liquid and diversified benchmarks for the commodity futures market. They are composed of futures contracts on 19 physical commodities traded on U.S. exchanges, with the exception of aluminium, nickel and zinc, which trade on the London Metal Exchange (LME). In addition, there are nine sub-indexes, representing the major commodity sectors within the index: Energy (including petroleum and natural gas), Petroleum (including crude oil, heating oil and unleaded gasoline), Precious Metals, Industrial Metals, Grains, Livestock, Softs, Agriculture and ExEnergy.
To learn more about the DJ-AIG Commodity Index:
The 9 new Forward Index Securities to be listed on 10 October 2007 are:
- ETFS Forward All Commodities DJ-AIGCI-F3SM
- ETFS Forward Agriculture DJ-AIGCI-F3SM
- ETFS Forward Energy DJ-AIGCI-F3SM
- ETFS Forward Ex-Energy DJ-AIGCI-F3SM
- ETFS Forward Grains DJ-AIGCI-F3SM
- ETFS Forward Industrial Metals DJ-AIGCI-F3SM
- ETFS Forward Livestock DJ-AIGCI-F3SM
- ETFS Forward Petroleum DJ-AIGCI-F3SM
- ETFS Forward Softs DJ-AIGCI-F3SM
The 19 new Forward Individual Securities to be listed at a later date are:
- ETFS Forward Aluminium
- ETFS Forward Coffee
- ETFS Forward Copper
- ETFS Forward Corn
- ETFS Forward Cotton
- ETFS Forward Crude Oil
- ETFS Forward Gasoline
- ETFS Forward Gold
- ETFS Forward Heating Oil
- ETFS Forward Lean Hogs
- ETFS Forward Live Cattle
- ETFS Forward Natural Gas
- ETFS Forward Nickel
- ETFS Forward Silver
- ETFS Forward Soybean Oil
- ETFS Forward Soybeans
- ETFS Forward Sugar
- ETFS Forward Wheat
- ETFS Forward Zinc
This advertisement does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any transferable securities to be issued by ETFS Commodity Securities Limited or any other securities, nor shall it or any part of it nor the fact of its distribution form part of or be relied on in connection with any contract or investment decision relating thereto. Any offer, invitation or solicitation shall be made solely by means of the prospectus and recipients of this advertisement who are considering a purchase of securities following distribution of the prospectus in connection therewith are reminded that any such purchase should be made solely on the basis of the information contained in such prospectus and any supplementary prospectus(es). This advertisement does not constitute any recommendation regarding the securities of ETFS Commodity Securities Limited.
The communication of this press release is not being made by, and this press release has not been approved by, an authorised person for the purposes of section 21 of the Financial Services and Markets Act 2000 (the "FSMA"). Accordingly this press release is not being distributed to, and must not be passed on to, the general public in the United Kingdom. The communication of this press release or any other document issued in connection with the offer and sale of the ETCs is only being made to and directed at those persons in the United Kingdom falling within the definition of Investment Professionals (as defined in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"), or high net worth entities, and other persons to whom it may otherwise lawfully be communicated, falling within Article 49(1) of the Order or any person to whom it may otherwise lawfully be made (all such persons together being referred to as "relevant persons"). The communication of this press release (or any other document issued in connection with the offer and sale of the ETCs) must not be acted upon or relied upon by persons who are not relevant persons. Persons distributing this press release must satisfy themselves that it is lawful to do so. All applicable provisions of the FSMA must be complied with in respect of anything done in relation to the ETCs in, from or otherwise involving the United Kingdom.
This is not an offer of securities for sale in the United States. Commodity Securities have not been and will not be registered under the USSecurities Act or any other applicable law of the United States. Commodity Securities are being offered and sold only outside the United States to non-US persons in reliance on the exemption from registration provided by Regulation S of the US Securities Act. The Issuer has not been and does not intend to become registered as an investment company under the Investment Company Act and related rules. Commodity Securities and any beneficial interest therein may not be reoffered, resold, pledged or otherwise transferred in the United States or to US persons. If the Issuer determines that any Security Holder is a Prohibited US Person (being a US Person who is not a "qualified purchaser" as defined in the Investment Company Act), the Issuer may redeem the Commodity Securities held by that Security Holder in accordance with the provisions described in the Prospectus. Commodity Securities may not be purchased with plan assets of any "employee benefit plan" within the meaning of section 3(3) of the United States Employee Retirement Income Security Act of 1974, as amended ("ERISA"), any "plan" described in section 4975(e)(1) of the United States Internal Revenue Code of 1986, as amended (the "Code") or any entity whose underlying assets include "plan assets" of any of the foregoing by reason of an employee benefit plan's or other plan's investment in such entity, which employee benefit plan, plan or entity is subject to Title I of ERISA or section 4975 of the Code or any United States Federal, state, or local law or non-United States law that is substantially similar to the prohibited transaction provisions of section 406 of ERISA or section 4975 of the Code (any such employee benefit plan, plan or entity, a "Prohibited Benefit Plan Investor"). If the Issuer determines that any Security Holder is a Prohibited Benefit Plan Investor, the Issuer may redeem the Commodity Securities held by that Security Holder in accordance with the provisions described in the Prospectus."
"Dow Jones," "AIG®" "Dow Jones-AIG Commodity IndexSM," "DJ-AIGCISM", "Dow Jones-AIG Commodity 3-Month Forward Index" are service marks of Dow Jones & Company, Inc. and American International Group, Inc. ("American International Group"), as the case may be, and will be licensed for use for certain purposes by ETF Securities Ltd. ETCs based on the DJ-AIGCISM or related sub-indices (including single commodity sub-indices) or 3-Month Forward Indexes are not sponsored, endorsed, sold or promoted by Dow Jones, AIG Financial Products Corp. ("AIG-FP"), American International Group, or any of their respective subsidiaries or affiliates, and none of Dow Jones, AIG-FP, American International Group, or any of their respective subsidiaries or affiliates, makes any representation regarding the advisability of investing in such product(s).
To obtain a copy of the prospectus please visit the website at www.etfsecurities.com
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