RICI Index... How do i buy into this ?

dunker1

Hi guys,
Anyone know how to buy into Jim Rogers commodity index?
Ideally would be via etfs but i dont think this is possible, any help appreciated.
Thanks

jon3001

I don't believe it's possible in the UK but you have other options such as exposure to the DJ-AIG All Commodities index via ETCs.

If you want just want broad commodity exposure then I believe the F3 (3 month forward) indices will probably provide higher long term returns with reduced risk (down to technical reasons involving contango you may have read in Jim Roger's book).
http://www.etfsecurities.com/cslf3/etfs_all_commodities_f3.asp

The RICI is somewhat heavier in its allocation to energy than DJ-AIG. So if you wanted a poor man's RICI you could do the following:

90% ETFS Forward All Commodities DJ-AIGCI-F3SM (FAIG)
10% ETFS Forward Energy DJ-AIGCI-F3SM (ENEF)

dunker1

Thanks Jon, im already aware of these etfs and have bought into a soft commodities etf.
Was just interested in the RICI

jon3001

If you're prepared to trade on European exchanges then you can look at this:
http://www.abnamromarkets.com/EN/Showpage.aspx?pageID=10&isin=LU0249326488

I don't know if your broker allows access but SelfTrade, whom many on this forum use, have this ETF listed. You can choose between German and Swiss exchanges depending on whether you want to trade in EUR or USD.
http://www.selftrade.co.uk/quote.php?symbole=5pM9SA
http://www.selftrade.co.uk/quote.php?symbole=2aMRIC

Maggieliuus

You can buy Elements Linked to Rogers International Commodity Index Total Return (RJI) or the three sub indices: Elements Linked to Rogers International Commodity Index Agriculture Total Return (RJA), Elements Linked to Rogers International Commodity Index Energy Total Return (RJN) and Elements Linked to Rogers International Commodity Index Metals Total Return (RJZ).

If you have been following Jim lately, you would know that he is recommending RJA, the agriculture subindex, right now.

All four funds are exchange-traded notes (ETN), not exchange-traded funds (ETF). They are structured as debt instruments which will mature in 2022 but do not pay interest. The funds do not own the underlying commodities and their price movements will correspond with indices they mimic. Their annual expense ratios are 75 basis points.

It is worth noting that as debt instruments, they rely on the parent company Swedish Export Credit Corp's ability to pay. However, since Swedish Export Credit Corp is 100% owned by the Swedish government, I see minimal credit risk.

Maggieliuus

Also there is "Market Access Jim Rogers Commodity Index Fund" (ISIN: LU0249326488) listed on Deutsche Borse's XTF trading platform.

jon3001

Maggieliuus wrote: »

Also there is "Market Access Jim Rogers Commodity Index Fund" (ISIN: LU0249326488) listed on Deutsche Borse's XTF trading platform.

Yes - that's the one in the link I posted above. Apologies for not being clearer.

dunker1

Thanks for the info and replies.
I may just stick with purchasing the various etfs in cotton, silver, coffee and sugar, already have the soy,wheat and corn etf.
Can you knowledgeable people suggest the best currencies to purchase these in, i know both sterling and dollars are weak right now, i dont understand the currency fluctuations too much, and i dont want to see possible gains wiped out by exchange differences.
Cheers

jon3001

dunker1 wrote: »

Can you knowledgeable people suggest the best currencies to purchase these in, i know both sterling and dollars are weak right now, i dont understand the currency fluctuations too much, and i dont want to see possible gains wiped out by exchange differences.

I've wondered this sometimes but my best guess is that currency denomination of the ETF isn't going to make any difference. Ultimately, somewhere, there will be a futures contract backing the ETF which will probably traded in USD and probably on a US exchange (e.g. NYBOT for sugar). So by the time you come to ascertain what your ETF (denominated in USD, EUR, etc) might be worth in Sterling terms, any forex considerations will already be priced in. An EUR based ETF wouldn't have any advantage over a USD based ETF. DYOR - try some calculations, etc. but I'd be surprised if this wasn't the case.

If the dollar declines then the commodity (priced in USD) will look 'cheap' to international traders. This encourages demand so increasing the contract price to compensate.

As the dollar becomes less valuable, foreign producers (pricing in USD) will want more of them to sell their commodity.

One issue is the way funding for the futures contracts are collateralised. Futures can be bought on the margin (e.g. 10% deposit to control 100% of the contract). However - you're not subject to the dangers of margin trading. From what I understand the other 90% is used as collateral (in case of margin calls) and invested in US treasury bills which earn interest. Of course these would be subject to currency fluctuations to a Sterling investor. But since both the contract and collateral are in USD there's no danger of not being able to cover the contract.

purch

If the ETF is tracking an index traded in USD then when you buy/sell units in USD then you will have an interest rate risk against the value of your capital investment, as well as the value of any gains and losses

If you buy an ETF tracking the same index in another currency, ie. a GBP denominated ETF tracking a USD denominated index then you add a different layer of ER risk in that the value of the investment can fluctuate irrespective of how the actual index you want to track is moving. In other words if the index remains the same, but GBP loses value against the USD you will show a loss, or vica versa. Of course in this scenario your gains/losses are in GBP so therefore not subect to ER risk

I agree with all of the above too

randolsky_2

jon3001 wrote: »

If you're prepared to trade on European exchanges then you can look at this:
http://www.abnamromarkets.com/EN/Showpage.aspx?pageID=10&isin=LU0249326488

I don't know if your broker allows access but SelfTrade, whom many on this forum use, have this ETF listed. You can choose between German and Swiss exchanges depending on whether you want to trade in EUR or USD.
http://www.selftrade.co.uk/quote.php?symbole=5pM9SA
http://www.selftrade.co.uk/quote.php?symbole=2aMRIC

I'm also trying to get RICI exposure but when I phoned Selftrade they said they list it on their website but can't deal in it! Anyone know where I can open an account to deal in this ETF?

Thanks in advance