Introduction

The Market Access Rogers International Commodity Index UCITS ETF (RICI) is one of Europe’s longest-established and broadest commodity ETFs. It was launched in 2006 and is listed in Frankfurt, Zurich and on the London Stock Exchange.

The ETF tracks the Rogers International Commodity Index® (RICIGLTR), a US dollar-denominated total return index of commodities consumed in the global economy, ranging from agricultural to energy to metal products. The Index provides exposure to 38 different exchange-traded commodities, through futures contracts quoted in four currencies, listed on 10 exchanges in four countries.

RICIGLTR is calculated on a total return basis, meaning that it includes an assumed interest rate return based on the USD 3-month T-bill rate.

Reasons to consider the RICI and broad commodity exposure

  • RICI has the broadest range of constituents among major commodity benchmarks
  • A broad index provides a potential hedge against rising inflation risks
  • Themes: base metals are key to the clean energy transition
  • Themes: climate change impacts agriculture and energy demand
  • Oil and gold provide a potential hedge against geopolitical risks

Performance

Source: Market Access, Bloomberg. Past performance should not be used as an indicator of future performance.

Discrete annual performance to 30 September 2022 (in GBP)

Sept 17 - Sept 18Sept 18 - Sept 19Sept 19 - Sept 20Sept 20 - Sept 21Sept 21 - Sept 22
Jim Rogers International Commodity Index (GBP)14.18%-3.29%-18.18%49.61%43.03%
Spot Gold (GBP)-4.31%31.04%21.82%-10.65%14.03%
FTSE 100 Index1.86%-1.36%-20.82%20.80%-2.72%
FTSE NAREIT All Equity REITS TR Index (GBP)7.65%27.92%-16.44%26.15%1.01%
5 Yr Gilt Index0.99%0.78%0.23%0.20%1.53%

Source: Market Access, Bloomberg. Past performance should not be used as an indicator of future performance.

Five year returns to 30 September 2022 (in GBP)

5 YearRICIGLTR (GBP)GBP Gold Spot (XAU)FTSE 100 Index
Performance93.32%55.63%-6.50%
Annualised performance14.09%9.25%-1.33%
Annualised Volatility19.07%13.99%17.64%
Max Drawdown40.17%22.43%36.61%
Sharpe Ratio5.987.815.59

Source: Market Access, Bloomberg. Past performance should not be used as an indicator of future performance.

Commodities as an inflation hedge

Commodities, as key inputs in manufacturing and consumer staples, can be leading indicators of emerging inflation and exposure to them can serve to potentially hedge inflation risks.

Source: Market Access, Bloomberg. Past performance should not be used as an indicator of future performance.

COMMODITY INDEX CONSTITUENTS RICI vs BLOOMBERG, REFINITIV/CC CRB, S&P GSCI

RICI BCOM CRB S&P GSCI

Source: Target 2022 weights. Market Access, index issuer websites: RICI, Bloomberg Commodity Index, Refinitiv/CC CRB, S&P GSCI. RICI - Rogers International Commodity Index (RICIGLTR), BCOM – Bloomberg Commodity index (BCOMTR), CRB – Refinitiv/CoreCommodity CRB Index (CRYTR), S&P GSCI - S&P GSCI Index (SPGCGPTR).

RICI index background

James B. Rogers, Jr. designed the index in the late 1990s. His focus was to create an index that reflected global consumption of commodities.

This global focus differentiates the RICI from other commodity indices, meaning that it includes commodities like rice, rubber, white sugar and lumber.

There are 13 commodities in the RICI that are not included in the other three comparison benchmarks. They represent 15.45% of the index target weights.

Base metals – essential to the transition to clean energy

In the drive towards a net zero carbon economy, there will be a potentially significant uplift in demand for commodities that are critical in enabling the transition to clean energy. This includes nickel, which is one of the key materials used in batteries for electric vehicles.

Stated Policies Scenario, an indication of where the global energy system is heading based on a sector-by-sector analysis of today’s policies and policy announcements.

Sustainable Development Scenario, indicating what would be required in a trajectory consistent with meeting the Paris Agreement goals.

Source: International Energy Agency, The Role of Critical Minerals in Clean Energy Transitions, NTree International

Commodity in focus – Natural Gas

Source: Data as of 30 September 2022. Market Access, Bloomberg.

The top-performing commodity both in Q3 and Year-to-Date is Natural Gas. The price of natural gas futures rose almost 26% in Q3, taking its total gain to 83% over the first three quarters of 2022 (Source: U.S. Energy Information Administration - Nymex Natural Gas Futures Contract 1).

There are several main drivers of this dramatic performance:

  • Supply shortage in Europe, due primarily to the war in Ukraine and the resulting reduction in European imports of natural gas from Russia
  • Russia’s share of the EU’s natural gas imports fell sharply from 39.7% in 2021, to just 22.9% for Q2 2022. The UK has also reduced its Russian fossil fuel imports to almost zero, from GBP 4.2bln over the year to July 2022.
  • The supply shortage has caused a sharp rise in wholesale prices of natural gas in Europe.
  • US natural gas prices have also risen steeply. US demand for natural gas has increased considerably since 2020, as the Biden administration has aimed to phase our coal.
  • Low natural gas inventories in the US have also helped drive global prices higher. Increasing US exports of natural gas have lowered US inventories and exposed the domestic US market to global prices.

How to invest

Please contact your wealth management adviser or stockbroker. The ETF is also available through leading online investment platforms. The ETF is ISA and SIPP eligible.

Please contact us if there any issues with trading the ETF through a platform and we will gladly try to assist.

To find out more, please click here for fund information and literature.

Please read the prospectus, including the risk factors, and KIID before making an investment in the ETF.

Click here to find out more about Market Access and China Post Global.

key features

Legal form UCITS ETF
ISIN LU0249326488
TER / OCF 0.60%
Domicile Luxembourg
Management Company FundRock Management Company S.A.
Investment Manager China Post Global (UK) Limited
Custodian and Administrator RBC Investor Services Bank S.A.
Replication Synthetic (swap with Barclays Bank Plc)
ISA / SIPP eligible Yes
UK Reporting Fund Status Yes