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 31 March 2023 (in GBP)
| Mar 18 - Mar 19 | Mar 19 - Mar 20 | Mar 20 - Mar 21 | Mar 21 - Mar 22 | Mar 22 - Mar 23 | |
|---|---|---|---|---|---|
| Jim Rogers International Commodity Index (GBP) | 4.67% | -27.05% | 35.96% | 69.06% | -4.17% |
| Spot Gold (GBP) | 4.87% | 28.16% | -2.49% | 18.99% | 8.28% |
| FTSE 100 Index | 3.15% | -22.08% | 18.37% | 11.95% | 1.54% |
| FTSE NAREIT All Equity REITS TR Index (GBP) | 29.57% | -11.72% | 20.89% | 29.61% | -14.13% |
| 5 Yr Gilt Index | 1.02% | 0.53% | 0.03% | 0.65% | 2.83% |
Source: Market Access, Bloomberg. Past performance should not be used as an indicator of future performance.
Five year returns to 31 March 2023 (in GBP)
| 5 Year | RICIGLTR (GBP) | GBP Gold Spot (XAU) | FTSE 100 Index |
|---|---|---|---|
| Performance | 68.19% | 68.86% | 8.15% |
| Annualised performance | 10.96% | 11.05% | 1.58% |
| Annualised Volatility | 19.47% | 14.28% | 17.77% |
| Max Drawdown | 40.17% | 22.43% | 36.61% |
| Sharpe Ratio | 0.52 | 0.71 | 0.04 |
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, UBS CMCI, S&P GSCI
| RICI | BCOM | UBS CMCI | S&P GSCI |
|---|
Source: Target 2023 weights. Market Access, index issuer websites: RICI, Bloomberg Commodity Index, UBS CMCI, S&P GSCI. RICI - Rogers International Commodity Index (RICIGLTR), BCOM – Bloomberg Commodity index (BCOMTR), UBS CMCI Constant Maturity Commodity Index (CMCITR), 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 10 commodities in the RICI that are not included in the other three comparison benchmarks. They represent 8.05% 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 – Crude Oil
Source: Data as of 31 March 2023. Market Access, Bloomberg.
- Oil, despite the increasing focus on renewables, remains a key commodity for the global economy - with demand closely linked to economic growth.
- Analysts are looking for an increase in demand in 2023 on the back of growth in China and increasing travel post Covid, particularly as we move into the summer season in the Northern Hemisphere. The International Energy Agency is projecting that world oil demand will grow to a record 101.9 million barrels per day (mb/d) this year (see https://www.iea.org/reports/oil-market-report-april-2023)
- There are concerns about potential market tightness because of supply side developments. In April, OPEC+ announced production cuts of 1.16m barrels/day on top of existing cuts of 2m b/d, which will remain in effect until December 2023. Growth in non-OPEC production is projected by the IEA to be insufficient to offset this loss, and the oil market could move into supply deficit in 2H 2023 (see https://www.iea.org/reports/oil-market-report-april-2023)
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 |