The U.S. division of German asset manager DWS launched its first active exchange-traded fund (ETF) on Tuesday, bringing the number of total U.S.-listed ETFs to nine, the company said.
The Xtrackers RREEF Global Natural Resources ETF (NRES.O) will invest in an array of commodity producers globally, from metals mining companies to paper product businesses.
Most of the existing broadly-based ETFs already in existence are passive investment products designed to track an index, or invest more directly in commodities via futures contracts.
Existing commodity producer ETFs that are actively managed tend to focus on specific sectors, such as energy or precious metals producers.
Outperformance will hinge on the managers’ ability to navigate commodity price cycles as well as to analyze business fundamentals, said Avi Feinberg, a portfolio manager at DWS.
“Commodities themselves are volatile and cyclical, but that’s not the only source of potential return” from the new ETF, Feinberg said. The portfolio management team can choose to over- or under-weight the importance of mining, energy and agricultural commodities in the fund, as well as select individual stocks.
“We don’t have to wait until some new or smaller opportunities make their way into the benchmark,” he added.
Arne Noack, head of systemic investment solutions, Americas at DWS, said the decision to launch the new ETF at this point in the market and interest rate cycles wasn’t a conscious choice.
“In the absence of a crystal ball, we don’t launch products as a tactical trade,” Noack said.
However, he added, with inflation seeming likely to remain in the headlines, “commodities could be more in the forefront of investors’ minds” as a hedge against rising prices and the risk of sell offs in other asset classes.
