Elkhorn Investments has launched the Elkhorn Fundamental
Commodity Strategy exchange-traded fund (ETF), which it describes as the first
ETF based on Research Affiliates’ fundamental research.
“Commodities are a forgotten asset class in today’s market,”
says Ben Fulton, founder and CEO of Elkhorn. “As a result, product innovation
has lagged that of other asset classes for the better part of a decade.
Together with Research Affiliates, we are excited to create a better way for
investors to access the broader commodity market in an ETF without a K-1 tax
The Elkhorn Fundamental Commodity Strategy ETF is an
actively-managed ETF that seeks to provide investment returns that are highly
correlated to the Dow Jones RAFI Commodity Index by investing in
exchange-traded commodity futures contracts and other commodity-linked
instruments, the firm explains. The Dow Jones RAFI Commodity Index offers an
alternative beta strategy that uses price momentum and roll yield to outperform
the broad market. The ETF is designed to be a fundamental factor-weighted,
broad-market commodity strategy with a modified dynamic roll.
The fund’s assets will also be invested in a short duration
portfolio of highly-liquid, high-quality bonds to collateralize exposure and
target a total return which exceeds that of the Dow Jones RAFI Commodity Index,
according to Elkhorn Investments.
Rob Arnott, chairman and Chief Executive Officer of Research
Affiliates says, “Much is made of smart beta strategies within equities and
increasingly bonds. The need for smart beta strategies within broad
commodities, however, has largely been overlooked. We believe commodities can
be a powerful inflation hedge and diversifier. Commodities can also offer
excellent long-term return potential, especially from current levels,
especially if the index rebalances against fads and bubbles.”
The Elkhorn Fundamental Commodity Strategy ETF is one of two
actively-managed, commodity-based ETFs that the company recently launched. The
second is the Elkhorn Commodity Rotation Strategy ETF. The firm’s ETF lineup
also includes the Elkhorn S&P High Quality Preferred ETF.
More information about the Elkhorn Fundamental Commodity Strategy ETF can be found online here