Property and commodities trackers

tushingham

Can anyone recommend a 'good' passive vehicle for tracking commodities and any for global commercial or residential property?

Have seen some ETFs for commodities but not sure on the best way to assess how 'good' they are and their risks or gearing. same with reits.

all recommendations greatly appreicated. Will be buying in ISA via Hargreaves Lansdown if it makes any difference? (although im thinking of transferring to bestinvest)

t

saveonarola

Okay, sorry this is a bit of a mess, but I don't have time to rewrite it all. I did some research on cheap global property trackers last autumn and at that time there were four that fit the bill. However, they are not all equal. They don't all track the same index; they are not all easily available, or available on all platforms; they don't all replicate the index in the same way - some are physical and some synthetic; they don't all deal with dividends in the same way - some capitalise and some distribute; they don't all have the same spreads, which can make a significant difference with small and relatively illiquid funds like these.

The cheat sheet goes like this: iShares ETF - dealing costs, low TER, fairly well-established, developed world; HSBC ETF - dealing costs, very low TER, newish, developed world; dbx-trackers ETF - dealing costs, low TER, newish, developed and some developing exposure; BlackRock unit trust - no dealing costs, higher TER, developed world, newish.

For what it's worth, I decided I wanted the BlackRock Global Property Securities Equity Tracker, because being a fund it had no trading costs, and for my low level of investment that made sense, even though its TER was significantly higher than the ETFs. But the only place that was offering this fund was HL (over the phone - it wasn't on the website), and I wanted to go with Bestinvest, so in the end I didn't get it. I'm hoping that Bestinvest will add it to their platform but no word on that yet.

The best I can do is give you all the information I have, and also steer you towards these articles and comment threads:
http://monevator.com/low-cost-index-trackers/
http://monevator.com/9-lazy-portfolios-for-uk-passive-investors-2010/ (my stuff in comments section - handle with care, because I was still doing my research)
http://monevator.com/etf-choice/ (again refer to my comment below the piece)
http://monevator.com/blackrock-index-funds-tracked/ (more about the BlackRock tracker in the comments section)

Here's the info dump. Again apologies for the mess. Reminder: This was stuff I put together in autumn 2011, so the figures relate to that date, and there may be other funds available now.

Also, never trust someone else's research. Always do your own research!

Global Property ETFs:

Db x-trackers FTSE EPRA/NAREIT Global Real Estate – developed and emerging, weighted by market cap (GBP: XGLR; ISIN: LU0489337005) – TER 0.6%; Launched March 2011; Total Return; capitalizing; tracks the FTSE EPRA/NAREIT Global Net Total Return Index (index ticker TRNHGU/TFTRNHGU); synthetic replication; UCITS IV; £12m under mgmt August 2011; Platforms: iii

iShares FTSE EPRA/NAREIT Developed Markets Global Property Yield – TER 0.59% US$1bn under management (SEDOL GBP: B1G5362; USD (IDWP) or GBP (IWDP); ISIN: IE00B1FZS350) (Tracks the FTSE EPRA/NAREIT Developed Dividend + Index (http://www.ftse.com/Indices/FTSE_EPRA_NAREIT_Global_Real_Estate_Index_Series/Downloads/EPRA_NAREIT_Developed_Dividend_Factsheet.pdf) – companies that have a one-year forecast dividend yield of 2% or greater) (UCITS III compliant) (Total Return Index Ticker TENGDNU; Price Index Ticker ENGD); Launched 20/10/06; physical replication; Annualised return since inception -3.22%, benchmark -2.02%; distributing; Platforms: iii;
Factsheet: http://eu.ishares.com/download/pdf/false/publish/repository/documents/dffs_comit/dub/CURRENT/PDF/!!!!!!_EQ_IWDP_IE00B1FZS350_GB_en.pdf
Annualised performance since inception: product -4.64, index -4.24.
iShares website: http://uk.ishares.com/en/rc/products/IWDP/performance

HSBC FTSE EPRA/NAREIT Developed (tracks the FTSE EPRA/NAREIT Developed (Net Total Return) Index) – TER 0.4% (since June 2011) (currency GBX) (SEDOL GBP: B5L01S8; Ticker: HPRD; Epic: HPRO; ISIN: IE00B5L01S80); index ticker TRNGLU/TFTRNGLU; distributing; UCITS IV; physical replication; £11m under mgmt August 2011; Platforms: iii

Global Property Fund:

Blackrock Global Property Securities Equity Tracker (follows FTSE EPRA/NAREIT Developed Net Total Return Index in GBP) (ISIN: GB00B670Q951); TER 0.88%; Assets under management £22m in Jan 2011 (fund launched Nov 2010); tracking error 0.5% since launch, YTD (Oct 2011) 0%; platforms: HL

As far as commodities are concerned, have a look at this:
https://forums.moneysavingexpert.com/discussion/3497941

tushingham

Thanks!
Some very useful stuff there. Think i need to look more closely at the counterparty risk and gearing of some of these. Although Im looking for some diversifiers Im not so sure on the risk or even that these best held passively.
Will do some more digging!

saveonarola

tushingham wrote: »

Think i need to look more closely at the counterparty risk and gearing of some of these.

Not sure what you mean by 'gearing' in this case. I don't think any of these investments use gearing, as such. As far as counter-party risk is concerned, the only one I'd be concerned about is the Db x-trackers ETF, which uses synthetic replication, so derivatives, etc. The others use physical replication, so hold the actual stocks in the index, or a selection of them, at least. Of course they may lend them out - don't know about that, but I imagine that information ought to be available in fund prospectuses or wherever.

tushingham

Was looking at some REITs at the same time as the commodity info you shared. Replied talking about both hence the gearing. sorry!

t