Zurich launches new Indexed Commodities Fund

Over the last number of years, we have seen increased demand from Financial Brokers and Advisors for a specialist commodity fund to provide further diversification when constructing bespoke client fund portfolios. With commodities making up a large part of the alternative component of our multi-asset funds, we also wanted to formalise our management of these commodity assets into a single fund offering. The role of commodities in providing portfolio diversification is well proven*. With that in mind, there may be a good opportunity to explore this asset class further, and the launch of this fund may be timely.

What is the Indexed Commodities Fund?

The Indexed Commodities Fund is a unit-linked fund that gives investors the opportunity to participate in the performance of commodities including energy, grains and industrial and precious metals. The fund currently invests in an Invesco Exchange Traded Fund (ETF). The Invesco ETF is passively managed and aims to track an index, but may not track it exactly. The fund has a current risk rating of 5 and is a convenient way to gain exposure to commodities.

Diversify your bespoke client portfolio

Historically, commodities have tended to offer balance to investor portfolios during periods of elevated volatility. This is due to their lower correlation to movement in equity prices and can help to reduce the long-term volatility of the portfolio and therefore help to improve the risk-adjusted return profile. Given the challenges in getting a forecast of the economy exactly right, holding a diversified range of assets that move in different directions depending on market conditions can be helpful. Ensuring there is some exposure to commodities in your clients’ portfolio, depending on their individual situation, can be a prudent approach.

Ready made multi-asset portfolios

The indexed commodities fund makes up part of the alternatives component of the Prisma fund range. Zurich’s flagship range of multi-asset funds, the Prisma range is built on Zurich Investments market leading multi-asset expertise*. The five Prisma Funds target different risk profiles. Each of the Prisma Funds is diversified and can include equities, bonds, property, cash, and alternatives, such as commodities.

For more information

Zurich’s Indexed Commodities Fund is available as a standalone fund or as part of the Prisma fund range across the Zurich suite of Pensions, Savings and Investment products. You can find more information on the Indexed Commodities Fund by speaking to your Zurich Broker Consultant or visiting the Indexed Commodities fund page.

*Source: Zurich Life, June 2022.