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ETCs offer:

• Exposure to commodity markets - the value of your investment will rise and fall in relation to the price of the underlying commodity;
• Exempt from stamp duty - ETCs are not shares and so trades are exempt from stamp duty;
• ISA eligible - ETCs can be traded within a Shares ISA allowing you to shelter your profit from Capital Gains Tax
• Low dealing costs - ETCs are traded on Stock Exchanges and so can be traded through your share dealing accounts at the same cost as other equities;
• Portfolio diversification – ETCS can give broad representation across the commodity asset class
• Liquidity - ETCs are 'open ended' securities, which are created and redeemed on-demand.

Bear in mind that only some ETCs hold physical commodities as underlying assets within the fund: most use futures and option contracts to gain exposure to those asset classes.  Regardless of the structure, by investing in an ETC you are exposed to the credit risk of the issuer and its counterparties. 

Consider too the Distributor status of the ETC you are buying. Capital gains in Funds which do NOT have Distributor status will be treated as income by UK tax authorities and could hence be subject to a higher rate of tax than might apply if they were assessed for Capital Gains Tax purposes. The tax treatment depends on your individual circumstances and may be subject to change in the future.

Each issuer's website provides access to factsheets about each Fund, the Fund Prospectus, news and information. We would encourage you to take advantage of this information to assist you in making your investment decisions.

Current issuers, who typically will also offer ETFs, include:

Barclays Bank iPath

Barclays' iPath range is issued as Exchange Traded Notes (ETNs) which, technically, are senior, unsecured, unsubordinated debt securities issued by Barclays Bank PLC rather than being index funds.  They do not pay interest or dividends.

For further information visit the iPath website >

Deutsche Bank Commodities

ETCs from Deutsche Bank include physically-backed precious metals and index-based exchange traded commodities.

For further information visit the db ETC website >

ETF Securities

Despite their name, ETF Securities are one of the largest issuers of ETCs, all of which have Distributor status.

For further information visit the ETF Securities website

Lyxor Asset Management

Part of the Societe Generale Group, Lyxor offer a wide range of ETCs, ETFs and ETNs spanning various asset classes.

For further information visit the Lyxor ETF website >

Source

An exchange traded products platform in partnership with Bank of America Merrill Lynch, Goldman Sachs, Morgan Stanley and Nomura, Source offers a range of sector and index ETFs and ETCs.

For further information visit the Source website >

UBS

Global banking group UBS provides a range of ETCs spanning the major commodity sectors.

For further information visit the UBS website >

ETF Securities is a provider of Exchange Traded Commodities (ETCs) and 3rd generation Exchange Traded Funds (ETFs). The management of ETF Securities pioneered the development of ETCs, with the world's first listing of an ETC, Gold Bullion Securities in Australia and London in 2003 and then the world's first entire ETC platform which was listed on the London Stock Exchange in September 2006.

The Exchange Traded Products (ETPs) provide investors with a wide variety of investment strategies, with ETPs offering resource equities, physical, long, forward, leveraged and short exposure to all commodity sectors. ETPs are simple to access as they are traded in five currencies (EUR, USD, GBP, AUD and JPY) and listed on nine major Exchanges globally including the London Stock Exchange, the New York Stock Exchange, the Tokyo Stock Exchange, NYSE-Euronext Paris, NYSE-Euronext Amsterdam, Deutsche Börse, Borsa Italiana, the Australian Securities Exchange and the Irish Stock Exchange.

The ETF Exchange initiative is driven by client demand for increased liquidity, innovative products and reduced credit risks and counter-party exposure. The ETFX ETFs are all swap-backed ETFs using multiple counterparties, allowing more efficient tracking, with collateral being held in excess of UCITS guidelines. This issuance model is arguably the most efficient and risk averse available today.

The equity ETF range includes Europe’s first complete platforms of resource-equity ETFs, providing both cyclical and thematic exposure, and double leveraged (2x) nd double short (-2x) ETFs. These ETFs are listed on five European Exchanges (the London Stock Exchange, Deutsche Borse, NYSE Euronext, the Borsa Italiana and the Irish Stock Exchange) and traded in three currencies (USD, EUR and GBP).

More information on Investing in ETCs with ETFS >