WHEATON, IL--(Marketwired - Sep 21, 2016) - Elkhorn Investments, LLC, a pioneer of research-based investing, announced today the launch of the Elkhorn Fundamental Commodity Strategy ETF (BATS: RCOM), the first commodity exchange-traded fund (ETF) based on Research Affiliates' fundamental research.
In 2006, Rob Arnott and Ben Fulton built the first Fundamentally Weighted ETF tracking U.S. stocks while Ben was at PowerShares. Ten years later, the two are teaming up again to provide investors with an ETF that provides unique access to the recently-overlooked commodity space.
"Commodities are a forgotten asset class in today's market," said 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 form."
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 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.
Rob Arnott, Chairman and Chief Executive Officer of Research Affiliates commented, "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."
RCOM seeks to offer an institutionally-focused commodity solution with low tracking error to benchmark indices, a simple roll yield solution to address the potential negative impact of roll yields, and a dynamic commodity weighting methodology to adapt to the volatile commodity markets in an ETF with 1099 tax reporting (no K-1).
"In equities, benchmark indexes provide very efficient market exposure. This, however, is not the case within commodities," said Graham Day, SVP and Head of Product and Research. "We believe the Elkhorn Fundamental Commodity Strategy ETF is an important development in offering investors a more thoughtful way to invest in a broad, diversified basket of commodities."
This is one of two actively-managed, commodity-based ETFs that Elkhorn is launching today. The second being the Elkhorn Commodity Rotation Strategy ETF (DWAC). The launch of RCOM adds to Elkhorn's diverse ETF lineup, which includes the recently launched investment grade only Elkhorn S&P High Quality Preferred ETF (EPRF).
Founded in 2013 by Ben Fulton, a recognized leader and pioneer of the ETF industry, Elkhorn is redefining the relationship between investment strategy and product structure: designing, sponsoring and distributing innovative, research-based investments solutions. At Elkhorn, research drives design and advisors drive structural decisions. Elkhorn has a strategic relationship with Barclays which has increased the capacity of investment solutions offered by Elkhorn. To learn more about Elkhorn please visit www.elkhorn.com.
S&P® is a registered trademark of Standard & Poor's Financial Services LLC ("S&P"), a part of McGraw Hill Financial. Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC ("Dow Jones"). These trademarks have been licensed to S&P Dow Jones Indices LLC. It is not possible to invest directly in an index. S&P Dow Jones Indices LLC, Dow Jones, S&P and their respective affiliates (collectively "S&P Dow Jones Indices") do not sponsor, endorse, sell, or promote any investment fund or other investment vehicle that is offered by third parties and that seeks to provide an investment return based on the performance of any index. This document does not constitute an offer of services in jurisdictions where S&P Dow Jones Indices does not have the necessary licenses. S&P Dow Jones Indices receives compensation in connection with licensing its indices to third parties.
About Research Affiliates
Research Affiliates, LLC was founded in 2002 and is based in Newport Beach, California. Research Affiliates is dedicated to creating value for investors and seeks to have a profound impact on the global investment community through its insights and products. The firm is committed to being a global leader in smart beta and asset allocation and delivers solutions in partnership with some of the world's leading financial institutions, through these institutions' offerings of mutual funds, ETFs, separately managed accounts, and/or commingled accounts. As of June 30, 2016, about $161 billion in assets managed worldwide utilize investment strategies developed by Research Affiliates.
There are risks involved with investing in ETFs, including possible loss of money. The fund is actively managed. Shares are subject to risks similar to those of stocks, including those regarding short selling and margin maintenance requirements. Ordinary brokerage commissions apply. There can be no assurance that the fund's investment objective will be achieved. The fund is not an index tracking exchange-traded fund and is not required to invest in all components of the Benchmark index.
The fund seeks to provide investors with total return. Because the fund is non-diversified and can invest a greater portion of its assets in securities of individual issuers than a diversified fund, changes in the market value of a single investment could cause greater fluctuations in share price than would occur in a diversified fund. The fund may invest in commodity futures contracts traded on non-U.S. exchanges or enter into over the-counter derivative contracts with non-U.S. counterparties. The fund is subject to counterparty risk, options risk, pooled investment vehicle risk, swaps risk and more.
Alpha is a measure of performance on a risk-adjusted basis. Beta is a measure of volatility. Price momentum is the rate of acceleration of a security's price. Dynamic roll methodology is a strategy that utilizes a more flexible monthly futures contract rolling strategy, to determine the new futures contract months for the underlying commodities. Roll yield is the amount of return generated in by rolling a short-term contract into a longer-term contract.
Shares are not individually redeemable and owners of the shares may acquire those shares from the Fund and tender those shares for redemption to the Fund in Creation Units only, typically consisting of 200,000 Shares.
ALPS Distributors, Inc. is the distributor of Elkhorn exchange-traded funds.
Elkhorn Investments, LLC, S&P Dow Jones Indices LLC, Research Affiliates and ALPS Distributors, Inc. are not affiliated with each other.
RAFI® is a registered trademark of Research Affiliates, LLC ("RA") and is being used pursuant to a licensing agreement. Investment products based on the Dow Jones RAFI Commodity Index is not sponsored, endorsed, sold or promoted by RA or their respective affiliates and neither RA nor its respective affiliates or agents makes any representation regarding the advisability of investing in such product(s).
An investor should consider the investment objectives, risks, charges and expenses of the Fund carefully before investing. To obtain a prospectus containing this and other information, please call 630.384.8700. Read the prospectus carefully before investing.