logo
  Join        Login             Stock Quote

RBS Rolls Out Five Rogers Enhanced Commodity ETNs

 November 30, 2012 04:42 PM


(By Ron Rowland) The Royal Bank of Scotland (RBS) introduced five new exchange traded notes ("ETNs") on November 15.  The new ETNS are based on "enhanced" versions of Rogers International Commodity Indexes ("RICI").  The underlying indexes were developed by RBS and Jim Rogers in October 2007 and have been maintained on a daily basis the past five years.

These "enhanced" indexes provide exposure to futures contracts with varying maturities and seek to maximize returns when there are significant price differences between near-dated and future-dated commodity contracts (contango and backwardation).  A special rollover calendar is defined for each commodity to address certain conditions such as term structure, seasonality, and liquidity.

[Related -Xerox Corp. (XRX): An Insider’s $500,000 Insider Buy]

Jim Rogers and an RBS representative constitute the two-person Index Committee, which annually reviews and adjusts the composition and weightings of the underlying indexes.  Annual weightings are determined based on the expected global demand of each commodity and are rebalanced twice a year.

The five new ETNs:

  1. RBS Rogers Enhanced Agriculture ETN (RGRA) provides exposure to the futures contracts of 20 agricultural commodities (RGRA overview)
  2. RBS Rogers Enhanced Commodity Index ETN (RGRC) provides exposure to the futures contracts of 36 commodities (RGRC overview)
  3. RBS Rogers Enhanced Energy ETN (RGRE) provides exposure to the futures contracts of six oil and gas commodities (RGRE overview)
  4. RBS Rogers Enhanced Industrial Metals ETN (RGRI) provides exposure to the futures contracts of six industrial metal commodities (RGRI overview)
  5. RBS Rogers Enhanced Precious Metals ETN (RGRP) provides exposure to the futures contracts of four precious metals commodities (RGRP overview)

[Related -Qihoo 360 Technology Co Ltd. (QIHU) Q2 Earnings Preview: A Green Monday]

Each ETN's performance will be reduced by an investor fee, which is deducted at an annualized rate of 0.95%.  Additional information is available in the combined prospectus (pdf), including the performance comparisons below.

 

 

 

Analysis/Opinion:  The most puzzling question about these products is "why did RBS wait five years to release them?"  The underlying indexes, which were jointly developed by Jim Rogers and RBS, became available in October 2007.  That happened to be the same month that ELEMENTS introduced Rogers Commodity ETNs based on non-enhanced RICI indexes and a lower 0.75% investor fee.

If the enhanced versions perform as expected, then investors should easily recover the 0.20% higher fees for the RBS ETNs.  This could also entice ELEMENTS shareholders to migrate to the new RBS RICI ETNs.  With more than 93% of ELEMENTS assets in the four ETNs above, large scale departures would likely place the entire ELEMENTS complex on ETF Deathwatch.

Disclosure covering writer, editor, and publisher:  No positions in any of the securities mentioned.  No positions in any of the companies or ETF sponsors mentioned.  No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.

iOnTheMarket Premium
Advertisement

Advertisement


Post Comment -- Login is required to post message
Name:  
Alert for new comments:
Your email:
Your Website:
Title:
Comments:
 

rss feed

Latest Stories

article imageMedtronic, Inc. (NYSE:MDT) Q1 Earnings Preview: Trouble Brewing

Medtronic, Inc. (NYSE:MDT) will report financial results for the first quarter of its fiscal year 2015 on read on...

article imageMBIA Inc. (MBI) : BTI's $12 a Tough Task

MBIA Inc. (NYSE:MBI) is doing well on a day stocks are struggling The guarantee insurance company is the read on...

article imageUrban Outfitters, Inc. (URBN) Q2 Earnings Preview: A Snug Fit

Urban Outfitters, Inc. (NASDAQ:URBN) will hold a webcast to discuss its second quarter of fiscal-year 2015 read on...

article imageEstee Lauder Companies Inc. (EL) Q4 Earnings Preview: Options Player Betting On EL’s EPS Looking Pretty

Estee Lauder Companies Inc. (NYSE:EL) will release fiscal 2014 fourth quarter and full year financial read on...

Advertisement
Popular Articles

Advertisement
Daily Sector Scan
Partner Center



Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.