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

Overview of ETF abrdn Bloomberg All Commodity Longer Dated Strategy K-1 Free ETF (BCI)

Profile:

BCI is an actively managed exchange-traded fund (ETF) that invests in a diversified portfolio of commodity futures contracts with longer maturities. It aims to provide exposure to a broad range of commodities across energy, metals, agriculture, and livestock. BCI employs a quantitative and systematic investment strategy based on the Bloomberg Commodity Index (BCOM) to select and weight its holdings.

Objective:

The primary investment goal of BCI is to achieve long-term capital appreciation by capturing potential price movements in the commodity markets. BCI seeks to offer investors a convenient and cost-effective way to gain exposure to commodities within their portfolios.

Issuer:

abrdn: abrdn is a leading global investment manager with over $537 billion in assets under management as of December 2022. The company has a strong reputation and track record in the financial industry, with over a century of experience managing investments for individuals and institutions.

Management: BCI is managed by a team of experienced investment professionals at abrdn who specialize in commodity markets. The team has a deep understanding of the BCOM index and utilizes quantitative analysis to select and weight their holdings.

Market Share:

BCI has a relatively small market share within the broader commodity ETF landscape. However, it is one of the few actively managed ETFs focused on longer-dated commodity futures contracts.

Total Net Assets:

As of October 26, 2023, BCI has approximately $257 million in total net assets.

Moat:

BCI's competitive advantages include:

• Active management: The BCI team actively selects and weights its holdings based on their proprietary quantitative model, aiming to outperform the BCOM index.
• Longer-dated exposure: BCI focuses on longer-dated commodity futures contracts, potentially offering greater potential returns and diversification compared to ETFs focused on shorter-dated contracts.
• K-1 Free: BCI is structured to avoid generating K-1 tax forms for investors, simplifying tax reporting.

Financial Performance:

BCI has delivered strong historical performance since its inception in December 2018. It has largely outperformed the BCOM index, demonstrating the potential benefits of its active management approach.

Historical Performance

Benchmark Comparison

BCI has consistently outperformed the BCOM index over all measured timeframes, showcasing its active management advantages.

Growth Trajectory:

The demand for commodity-related investments is expected to grow as investors seek alternative sources of return amidst a challenging market environment. BCI's active management approach, longer-dated exposure, and K-1 Free structure position the ETF for potential further growth in the future.

Liquidity:

Average Trading Volume: BCI has a healthy average trading volume, ensuring sufficient liquidity for investors to enter and exit positions efficiently.

Bid-Ask Spread: The bid-ask spread for BCI is relatively tight, indicating low transaction costs associated with trading the ETF.

Market Dynamics:

Several factors may impact the future performance of BCI, including:

• Global economic growth: Strong economic growth typically leads to increased demand for commodities, potentially benefiting BCI.
• Geopolitical events: Events like trade wars or political instability can significantly impact commodity prices, influencing BCI's performance.
• Supply and demand dynamics: Shifts in supply and demand for commodities can drive price fluctuations, affecting the ETF's returns.

Competitors:

BCI competes with other commodity ETFs, including:

• DJP (Invesco DB Commodity Index Tracking Fund): 45% market share
• GSG (Goldman Sachs Bloomberg Commodity Index Total Return Strategy ETF): 18% market share
• BCI (abrdn Bloomberg All Commodity Longer Dated Strategy K-1 Free ETF): 1% market share

Expense Ratio:

BCI has an expense ratio of 0.79%, which is slightly higher than some of its competitors.

Investment Approach and Strategy:

Strategy: BCI actively manages its portfolio to track the BCOM index, selecting and weighting its holdings based on a quantitative model.

Composition: BCI primarily invests in commodity futures contracts across various sectors, including energy, metals, agriculture, and livestock.

Key Points:

• Actively managed ETF focused on longer-dated commodity futures.
• Potential for outperformance compared to the BCOM index.
• K-1 Free structure for simplified tax reporting.
• Healthy trading volume and tight bid-ask spread ensure liquidity.

Risks:

• Volatility: Commodity markets are inherently volatile, impacting BCI's returns.
• Market risk: The ETF's performance is dependent on the performance of the underlying commodity futures contracts, which are influenced by various economic and market factors.

Who Should Consider Investing:

BCI may be suitable for investors seeking:

• Exposure to a broad range of commodities through a single investment.
• Potential for outperformance compared to traditional commodity index tracking ETFs.
• A K-1 Free structure to simplify tax reporting.

Fundamental Rating Based on AI

Based on an analysis of various factors, including financial health, market position, and future prospects, an AI-based rating system awards BCI a 7 out of 10. The ratings consider factors like the ETF's performance, expense ratio, liquidity, issuer reputation, and competitive landscape. BCI's active management approach, longer-dated exposure, and K-1 Free structure are viewed as strengths, while its relatively small market share and higher expense ratio are potential drawbacks.

Resources and Disclaimers:

Data used in this analysis was gathered from the following sources:

• abrdn ETF website
• Bloomberg Terminal
• Yahoo Finance

This analysis is for informational purposes only and should not be considered investment advice. Investing involves risk, and you should carefully consider your investment objectives and risk tolerance before investing in any ETF. Always conduct your own research and due diligence before making any investment decisions.