“Barclays Global Investors (BGI) announced that it has temporarily suspended further creation of new shares of the iShares S&P GSCI Commodity-Indexed Trust (GSG). The unexpected move highlights just how far reaching the rapidly changing regulatory environment concerning the management of commodity ETFs has become,” ETF Guide Reports.
“The temporary limitation on issuance of new GSG shares may impair traders’ ability to balance the supply and demand for the Trust’s shares in the secondary market. The fund already trades at a slight premium of 0.42% to its underlying net asset value,” ETF Guide Reports.
“We are actively working with regulators, product partners and exchanges to explore solutions that will lead to resumption of the creation of new shares of the iShares S&P GSCI Commodity-Indexed Trust to satisfy demand,” said Michael Latham, Co-CEO of iShares at Barclays Global Investors.
He adds, “We’ve taken this temporary step to protect existing investors from being adversely affected by market reaction to proposed new regulations of commodity futures that have created uncertainty. Just as we were able to design a product that gave investors access to difficult-to-reach markets using a combination of significant talent, resources and perseverance under one set of regulatory guidelines, we are pursuing a solution for investors that will adjust to any new environment that results from proposed new regulations.”
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The investment (GSG) seeks to track the performance of the GSCI Excess Return Index. The fund will invest in a portfolio of exchange-traded futures contracts tracked by the index. The index currently tracks 24 different commodities. It is weighted with approximately 67% invested in energy, 16% in agriculture, 7% in industrial metals, 7% in livestock and 3% in precious metals. The index is production weighted to reflect the relative significance of those commodities to the world economy. The fund is nondiversified.