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

JavaScript chart by amCharts 3.20.131 Year Jim Rogers International Commodity Index vs Spot Gold and FTSE 100 (in GBP to 30 September 2024)Sep 23Dec 23Mar 24Jun 24Sep 24859095100105110115120125130135JS chart by amCharts
JavaScript chart by amCharts 3.20.13Jim Rogers International Commodity Index (RICIGLTR) (GBP)USD Gold Spot (XAU) (GBP)FTSE 100 Index (UKX)

Source: Market Access, Bloomberg. Past performance should not be used as an indicator of future performance.

Discrete annual performance to 30 September 2024 (in GBP)

Sep 19 - Sep 20Sep 20 - Sep 21Sep 21 - Sep 22Sep 22 - Sep 23Sep 23 - Sep 24
Jim Rogers International Commodity Index (GBP)-18.18%49.61%43.03%-2.94%-9.36%
Spot Gold (GBP)21.82%-10.65%14.03%1.92%30.00%
FTSE 100 Index-20.82%20.80%-2.72%10.36%8.27%
FTSE NAREIT All Equity REITS TR Index (GBP)-16.44%26.15%1.01%-10.01%22.93%
5 Yr Gilt Index0.23%0.20%1.53%3.93%4.10%

Source: Market Access, Bloomberg. Past performance should not be used as an indicator of future performance.

Five year returns to 28 September 2024 (in GBP)

5 YearRICIGLTR (GBP) GBP Gold Spot (XAU) FTSE 100 Index
Performance54.02%64.45%11.19%
Annualised performance9.02%10.46%2.14%
Annualised Volatility19.06%14.48%17.42%
Max Drawdown36.78%22.43%34.93%
Sharpe Ratio0.360.570.00

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.

JavaScript chart by amCharts 3.20.13Jim Rogers International Commodities Index vs US CPI Inflation and Inflation ExpectationsSep 14Sep 15Sep 16Sep 17Sep 18Sep 19Sep 20Sep 21Sep 22Sep 23Sep 2420406080100120140160-20246810US CPI (%)JS chart by amCharts
JavaScript chart by amCharts 3.20.13Jim Rogers International Commodity Index (RICIGLTR)(left axis)US 10YR breakeven rate (USGGBE10)(left axis)US CPI - % change year on year (CPI YOY)(right axis)

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

Source: Target 2024 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 11 commodities in the RICI that are not included in the other three comparison benchmarks. They represent 9.05% 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.

JavaScript chart by amCharts 3.20.13Projected global mineral demand growth from new electric vehicle (EV) sales by scenario, 2040 compared to 2020LithiumNickelCobaltManganeseCopperGraphiteRare earth elements051015202530354045Index, 2020 = 1JS chart by amCharts
JavaScript chart by amCharts 3.20.13Stated Policies ScenarioSustainable Development Scenario

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 – Gold

JavaScript chart by amCharts 3.20.13Year to date performance of Gold vs S&P 500, FTSE 100 and Crude OilDec 23Feb 24Apr 24Jun 24Sep 24859095100105110115120125130135JS chart by amCharts
JavaScript chart by amCharts 3.20.13Gold Spot (XAU BGN Curncy) S&P 500 (SPX INDEX)FTSE 100 (UKX INDEX)Brent Crude Oil (CO1 COMDTY)

Source: Data as of 30 September 2024. Market Access, Bloomberg.

Commodity in focus – Gold

Gold has been one of the top performing assets over the first nine months of 2024. We look at some the factors that will influence the gold price over the final quarter of the year. These include the outlook for interest rates, particularly in the US, the US presidential election and other geopolitical events, changes in tax policies in India, and central bank buying.

While optimism earlier in the year about the number of rate cuts in 2024 was dashed by relatively strong growth and inflationary pressures, we have now seen the UK and US follow the European Central Bank in reducing interest rates in August and September respectively. Economists at Goldman Sachs now expect the U.S. Federal Reserve to deliver consecutive 25-basis-point (bps) interest rate cuts from November 2024 through June 2025 to a terminal rate range of 3.25-3.5%.[1]

Lower interest rates point to a lower US dollar, which on balance should prove a positive for the gold price. In the US, where focus is increasingly turning to the presidential election in November, there is now greater uncertainty about the possible outcome. Uncertainty and risk increase investor appetite for holding gold. The prospect of a Trump presidency, which would be likely to feature increased tariffs, increased scope for trade wars, efforts to weaken the US dollar, and an increasing deficit, would on balance be supportive of gold as a hard asset.

In India, the customs duty on gold was reduced by more than 50%, from 15% to 6%, with effect from 24 July. This reduction could lead to an increase in demand both during the upcoming buying season (between August and December) and over the longer term. The World Gold Council’s econometric model suggests that Indian consumer demand, that is jewellery and bar and coin demand, could see an additional 50 tonnes or more in the second half of 2024.[2]

Another factor that could increase gold demand in India is the revised definition of “Specified Mutual Funds” that excludes gold ETFs from debt and money market. This will result in a change to a more favourable tax treatment, for which eligibility is being shortened from 36 months to 12 months. While the impact of these changes will not be immediate as they are due to take effect from 1 April 2026, it will make investing in gold ETFs more attractive and so should lead to an uptick in demand.[3]

Lastly, the role of central banks will be an important element to observe. The World Gold Council estimates that central banks contributed 5% to the move in the gold price in the first half of the year. [4] However, the People’s Bank of China did not buy any gold in May or June, potentially because it was looking to support China’s currency. Despite its pause, the World Gold Council expects central bank buying to remain above trend. This is backed up by its February-April 2024 central bank survey showing that 29% of gold reserves managers expect to increase gold exposure in the next 12 months, a figure that has grown each year since 2019, and 68% believe their exposure will remain unchanged.[5]

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