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Fund Times: Barclays Launches Commodity ETF

Plus, a new Vanguard subadvisor, Fidelity management change, and more.

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Barclays Global Investors has launched its iShares GSCI Commodity-Indexed Trust (GSG) on the New York Stock Exchange. The exchange-traded fund will attempt to track the performance of the GSCI Excess Return Index, which is a diversified basket of 24 commodities, though it has a significant focus on the energy sector. The fund will charge a 0.75% management fee, which is comparable with similar funds, such as Deutsche Bank's DB Commodity Index Tracking Fund (DBC), which launched earlier this year.

One interesting aspect of the fund's indexing strategy is that it will involve the use of "long positions in CERFs, which are contracts listed on the CME that have a term of approximately five years listing and whose settlement at expiration is based on the value of the GSCI Excess Return Index," according to the fund's prospectus. This is unusual because a more conventional way of attaining commodities exposure would be through the purchase of month-long futures contracts for the commodities in the benchmark. We'll be interested to see how the strategy works out over time, particularly since the longer-term nature of the CERF futures contract could have advantageous tax consequences for shareholders.

Lawrence Jones does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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