{"id":3438,"date":"2023-05-03T00:37:34","date_gmt":"2023-05-03T04:37:34","guid":{"rendered":"https:\/\/ifintechworld.com\/news\/bci-consider-a-few-alternatives-nysearcabci\/"},"modified":"2023-05-03T00:37:35","modified_gmt":"2023-05-03T04:37:35","slug":"bci-consider-a-few-alternatives-nysearcabci","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=3438","title":{"rendered":"BCI: Consider A Few Alternatives (NYSEARCA:BCI)"},"content":{"rendered":"
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Thesis<\/span><\/h2>\n

abrdn Bloomberg All Commodity Strategy K-1 Free ETF (NYSEARCA:BCI<\/span>) is a big fund that offers exposure to commodity markets with a high trading volume and low expense ratio. It’s also efficient in tracking its benchmark. But because I can find multiple better options for my own purposes, I wouldn’t invest in it right now.<\/span><\/p>\n

By comparing it to a variety of index-tracking commodity ETFs, as well as actively managed ones, you may discover this is the case too. Below, I will make such comparisons and point you to some alternatives that have either delivered superior risk-adjusted returns or have proved much more loosely correlated to the market.<\/p>\n

What does BCI do?<\/h2>\n

BCI is an index-tracking commodity ETF issued by abrdn ETFs Advisors LLC on 03\/30\/2017 and managed by the same and Vident Investment Advisory, LLC. Its assets under management are $910.13 million right now.<\/span><\/p>\n

The ETF uses a representative sampling technique in tracking the performance of the Bloomberg Commodity Index Total Return. This index currently consists of 24 futures contracts on commodities, such as aluminum, coffee, gold, copper, cotton, crude oil, corn, and more (totaling 22 commodities). The criteria the index uses to weight those positions are 1) liquidity data, 2) U.S. dollar-weighted production data, and 3) concentration limits. Right now, BCI’s biggest allocations are in gold, WTI crude oil, and Brent crude oil.<\/p>\n

The fund uses a Cayman Islands subsidiary to invest in the futures and, therefore, it doesn’t report income using a K-1. As a result, it can also invest only up to 25% of its total assets in the subsidiary; it has allocated the rest of the assets in 3-month U.S. Treasury Bills.<\/p>\n

Performance<\/h2>\n

Let’s begin assessing BCI’s performance by looking at how closely it tracked its index. In the last 5 years, the benchmark’s price increased by 5.36% per year and the fund returned 4.99%. On a cumulative basis, the benchmark’s price increased by 29.85% and the ETF returned 27.58%. Thus far, BCI looks efficient in its tracking.<\/p>\n

As you may already know, researching one commodity ETF can easily lead you to a superior one. So, let us take a look at how BCI performed against some of its competitors.<\/p>\n

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Data by YCharts<\/figcaption><\/figure>\n<\/p>\n

As it turns out, it seems that there are plenty of index-tracking commodity ETFs that have delivered better returns in the last 5 years. Only one fund has underperformed BCI, while there are three alternatives that have done much better. Direxion Auspice Broad Commodity Strategy ETF (COM), for example, has returned 54.41% while BCI returned 22.36% during this period. Of course, their different allocations may explain this; to be practical, though, I suggest we take a look at the risk profile of each. If there’s a case to be made for lower risk in BCI, this is a fast and easy way to find it.<\/p>\n

<\/span><\/p>\n\n\n\n\n\n\n<\/colgroup>\n\n\n\n\n\n\n\n\n\n
Ticker<\/strong><\/td>\nMaximum Drawdown<\/strong><\/td>\nStandard Deviation Annualized<\/strong><\/td>\nCorrelation (SPY)<\/strong><\/td>\nBeta (SPY)<\/strong><\/td>\nSharpe<\/strong><\/td>\n<\/tr>\n
BCI<\/td>\n-30.49%<\/td>\n15.72%<\/td>\n0.52<\/td>\n0.43<\/td>\n0.25<\/td>\n<\/tr>\n
COM<\/td>\n-15.06%<\/td>\n9.85%<\/td>\n0.38<\/td>\n0.2<\/td>\n0.78<\/td>\n<\/tr>\n
BCD<\/td>\n-26.11%<\/td>\n14.86%<\/td>\n0.52<\/td>\n0.41<\/td>\n0.48<\/td>\n<\/tr>\n
DBC<\/td>\n-37.77%<\/td>\n19.31%<\/td>\n0.53<\/td>\n0.54<\/td>\n0.36<\/td>\n<\/tr>\n
CMDY<\/td>\n-28.05%<\/td>\n14.41%<\/td>\n0.5<\/td>\n0.38<\/td>\n0.28<\/td>\n<\/tr>\n
USCI<\/td>\n-42.71%<\/td>\n18.02%<\/td>\n0.45<\/td>\n0.43<\/td>\n0.24<\/td>\n<\/tr>\n
COMT<\/td>\n-36.02%<\/td>\n18.80%<\/td>\n0.54<\/td>\n0.54<\/td>\n0.23<\/td>\n<\/tr>\n
GSG<\/td>\n-53.18%<\/td>\n25.44%<\/td>\n0.5<\/td>\n0.66<\/td>\n0.18<\/td>\n<\/tr>\n<\/table>\n

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