Global X Bloomberg Commodity Complex ETF (ASX: BCOM)

The Global X Bloomberg Commodity Complex ETF (BCOM) provides a liquid, diversified gateway to the global economy by tracking a broad-based basket of twenty-five commodity futures. Spanning energy, metals, grains, and livestock, the fund seeks to replicate the Bloomberg Commodity Index Excess Return 3 Month Forward.

This asset class offers a powerful diversification tool for Australian investors, as commodities often remain uncorrelated with traditional share and bond markets while serving as an effective hedge against rising inflation. Given China’s significant role as a primary importer of key materials, BCOM allows for tactical positioning based on global consumption cycles. While the fund utilises a swap-backed structure to access futures markets—introducing unique counterparty risks—it captures the performance of an asset class that has historically outperformed the S&P/ASX 200 over the long term. It remains a robust solution for enhancing risk-adjusted returns within a balanced portfolio.

BCOM invests in a highly liquid, broad-based basket of commodities, including energy, grains, precious metals, industrial metals, softs, and livestock. BCOM seeks to provide investment results that generally correspond to the price, before fees and expenses, of the Bloomberg Commodity Index Excess Return 3 Month Forward.

BCOM seeks to provide investment results that generally correspond to the price, before fees and expenses, of the Bloomberg Commodity Excess Return 3 Month Forward Index.

• Commodities have outperformed the S&P/ASX 200 Index over the past 20 years.
• China is a major consumer, and an even more significant importer. China imports over 70% of the global share of traded iron ore, 72% of aluminum, and over 60% of both copper and soybeans. For this reason, any changes in China’s consumption could have a global impact¹.

¹ (JP Morgan Private Bank, 2023) https://privatebank.jpmorgan.com/apac/en/insights/markets-and-investing/will-china-s-recovery-drive-commodity-priceshigher#:~:text=China%20is%20a%20major%20consumer,could%20have%20a%20global%20impact.

Commodities cover a broad range of raw materials that form the basis of the global economy. Generally, commodities fall into six categories: energy (e.g. oil, gas and diesel), precious metals (e.g. gold, silver and platinum), industrial metals (e.g. copper, aluminium and zinc), livestock (e.g. live cattle and lean hogs), grains (e.g. wheat and soybeans) and softs (e.g. coffee, cotton and sugar).

A broad-based commodities basket packages up all these subcategories into one fund and captures the performance of the entire asset class. Doing so helps to reduce the market and idiosyncratic risks of any individual commodity. 

Investors often put diversification at the heart of portfolio construction. But effective diversification can sometimes require more than simply allocating across bond and share markets. To this end, many investors use commodities as a diversifier, as different and uncorrelated factors drive their performance to shares and bonds. The uncorrelated properties of commodities mean that this asset class may outperform when shares struggle. Moreover, commodities naturally tend to perform when inflation rises, given their prevalence in inflation-measuring consumer price index baskets. This provides powerful diversification for investors and enhances the opportunity to gain risk-adjusted returns for Australian dollar investors. 

Bloomberg Commodity Index
Source: Bloomberg. Data as of July

The Bloomberg Commodity Index Excess Return 3-Month Forward is comprised of up to 25 commodities futures contracts covering the livestock, energy, softs, grains, industrial metals, and precious metals sectors. The index uses five-year average liquidity and production data to determine the commodities selected and their relative weights.

Futures’ positions are weighted two-thirds by trading volume and onethird by worldwide production. The index rebalances each January with weight caps applied at both the commodity and sector levels. A cap and floor are applied to every commodity, limiting their weights to a maximum of 25% and a minimum of 2% at each rebalance. Sectors are capped at 33%. The index uses three-month forward futures contracts, which include commodity futures with expiry dates of at least three months.

Global X Bloomberg Commodity Complex ETF uses an unfunded swap to access commodity futures markets and to track the index.

• As a portfolio diversifier, given the historically low correlation of commodities with major Australian asset classes.
• As a tactical tool to express a view on consumption cycles over the shorter term.
• As a tool for hedging inflation, given commodities prevalence in inflation-measuring consumer price index baskets. 

BCOM is a swap-backed ETF. Globally, broad commodities ETFs often use swaps of various kinds. This is not a structure entirely unique to BCOM but is consequently subject to different risks than more-familiar equity and bond ETFs, such as swap counterparty credit risk. As the fund achieves its exposure through a swap agreement with a major financial institution, the performance of the fund could be adversely impacted should this financial institution fail to perform its obligations.

Separately, investors should note commodities are typically more volatile than equities and bonds, meaning that adding commodities can increase overall portfolio volatility.

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The issuer of units in Global X Bloomberg Commodity Complex ETF (BCOM) ARSN: 661 605 161 is the responsible entity of the Fund, being Global X Management (AUS) Limited (AFSL 466778, ACN 150 433 828) (“Global X”). The information provided in this document is general in nature; before acting on any information in this document and to determine the suitability of the product/s for your objectives, financial situation or needs, please read the product disclosure statement (PDS) and Target Market Determination (TMD) at www.globalxetfs.com.au. Investments in any product issued by Global X are subject to investment risk, including possible delays in repayment and loss of income and principal invested. The value or return of an investment will fluctuate and an investor may lose some or all of their investment. Past performance is not a reliable indicator of future performance. Portfolio Performance is calculated after fees and costs, including the investment management fee , but excludes the buy/sell spread. All returns are on a pre-tax basis.[NT1] [LH2] [NT3] [LH4] Global X Management (AUS) Limited (ACN 150 433 828) is the issuer of units in Global X Bloomberg Commodity Complex ETF (BCOM). “Bloomberg®” and Bloomberg Commodity Index Excess Return 3 Month Forward are service marks of Bloomberg Finance L.P. and its affiliates, including Bloomberg Index Services Limited (“BISL”), the administrator of the index (collectively, “Bloomberg”), and have been licensed for use for certain purposes by Global X Management (AUS) Limited. The Global X Bloomberg Commodity Complex ETF (the "Fund") is not sponsored, endorsed, sold or promoted by Bloomberg. Bloomberg does not make any representation or warranty, express or implied, to the owners of or counterparties to the Fund or any member of the public regarding the advisability of investing in securities generally or in the Fund particularly. The only relationship of Bloomberg to Global X Management (AUS) Limited is the licensing of certain trademarks, trade names and service marks and of the Bloomberg Commodity Index Excess Return 3 Month Forward, which is determined, composed and calculated by BISL without regard to Global X Management (AUS) Limited or the Fund. Bloomberg has no obligation to take the needs of Global X Management (AUS) Limited or the owners of the Fund into consideration in determining, composing or calculating the Bloomberg Commodity Index Excess Return 3 Month Forward. Bloomberg is not responsible for and has not participated in the determination of the timing of, prices at, or quantities of the Global X Bloomberg Commodity Complex ETF to be issued. Bloomberg shall not have any obligation or liability, including, without limitation, to the Fund's customers, in connection with the administration, marketing or trading of the Fund.