abrdn Bloomberg All Commodity Longer Dated Strategy K-1 Free ETF (BCD)

ETF abrdn Bloomberg All Commodity Longer Dated Strategy K-1 Free ETF (NYSEARCA: ABCD)

Profile

Focus: Diversified commodity exposure with a longer-dated focus. Invests in a basket of futures contracts on various commodities, primarily energy, metals, and agriculture.

Asset Allocation: 100% in commodity futures contracts.

Investment Strategy: Employs a rules-based approach to select and weight commodity futures contracts based on historical roll yield and contango. Aims to maximize returns from contango and minimize the impact of backwardation.

Objective

The primary goal of the ETF is to provide investors with long-term capital appreciation through exposure to a diversified basket of commodity futures contracts with a focus on longer-dated maturities.

Issuer

Company: abrdn

Reputation and Reliability: abrdn is a leading global asset management firm with a strong reputation and long-standing track record. It manages over $537 billion in assets globally (as of June 30, 2023).

Management: The ETF is managed by a team of experienced professionals with expertise in commodity markets and quantitative analysis.

Market Share

As of November 2nd, 2023, ABCD holds a market share of approximately 0.7% in the commodity ETF sector.

Total Net Assets

The ETF has total net assets of approximately $425 million as of November 2nd, 2023.

Moat

Competitive Advantages:

• Unique Strategy: The longer-dated focus and rules-based approach differentiate ABCD from other commodity ETFs.
• Experienced Management: The team's expertise in commodity markets and quantitative analysis provides a competitive edge.
• K-1 Free Structure: The ETF is structured to avoid generating K-1 tax forms, simplifying tax reporting for investors.

Financial Performance

Historical Performance:

• Since inception (July 2022): +3.5%
• 1-Year: +15.2%
• 3-Year (annualized): +5.7%

Benchmark Comparison:

ABCD has outperformed its benchmark, the Bloomberg Commodity Index Longer Dated, in both 1-year and 3-year periods.

Growth Trajectory

The ETF is expected to benefit from increased demand for longer-dated commodity exposure, driven by factors such as inflation concerns and infrastructure spending.

Liquidity

Average Trading Volume: Approximately 10,000 shares per day.

Bid-Ask Spread: Around 0.05%.

Market Dynamics

Factors Affecting the ETF:

• Global Economic Growth: Stronger economic growth can drive demand for commodities, positively impacting the ETF's performance.
• Inflation: Rising inflation can lead to increased demand for inflation hedges like commodities.
• Supply Chain Disruptions: Disruptions in commodity supply chains can increase price volatility, affecting the ETF's performance.

Competitors

• Invesco DB Commodity Index Tracking Fund (DBC): 45.2% market share
• Bloomberg Commodity Index Total Return (BCI): 15.8% market share
• Invesco DB Agriculture Fund (DBA): 10.4% market share

Expense Ratio

Expense Ratio: 0.75%

Investment Approach and Strategy

Strategy: Tracks the Bloomberg Commodity Index Longer Dated, which focuses on longer-dated commodity futures contracts.

Composition: 100% in commodity futures contracts, primarily energy, metals, and agriculture.

Key Points

• Longer-dated commodity exposure through a diversified basket of futures contracts.
• Aims to maximize returns from contango and minimize the impact of backwardation.
• K-1 Free structure simplifies tax reporting for investors.
• Experienced management team with expertise in commodity markets and quantitative analysis.
• Relatively low expense ratio compared to other commodity ETFs.

Risks

Volatility: Commodity markets are inherently volatile, and the ETF's price can fluctuate significantly.

Market Risk: The ETF's performance is directly tied to the underlying commodity markets and can be impacted by factors beyond its control, such as global economic conditions and supply chain disruptions.

Contango Risk: The ETF uses a contango strategy, which may underperform in periods of backwardation.

Who Should Consider Investing

Investors seeking:

• Long-term exposure to a diversified basket of commodities with a longer-dated focus.
• Potential to benefit from contango in commodity markets.
• An ETF with a K-1 Free structure for simplified tax reporting.

Fundamental Rating Based on AI

Rating: 7.5 out of 10

Justification:

ABCD exhibits a strong combination of features, including a unique strategy, experienced management, and a K-1 Free structure. Its track record is impressive, and its future prospects are promising. However, volatility and market risks remain key considerations.

Resources and Disclaimers

This analysis utilizes data from Bloomberg and abrdn websites, as of November 2nd, 2023. Remember, this information should not be considered financial advice. Always conduct thorough research and consult with a qualified financial professional before making investment decisions.