* ETF Securities lists its first ETCs in Switzerland
* Currency hedge to cut dollar risk from commodities bets
* Hedge provides implicit put on euro-Sfr in crisis scenario
By Martin de Sa'Pinto
ZURICH, Jan 22 ETF Securities is to launch a
string of products on the Swiss exchange on Tuesday designed to
cut the risk of exposure to currency fluctions for commodities
investors in Switzerland.
The London-based issuer of exchange-traded commodities
(ETCs), which give investors exposure to products such as
coffee, oil or nickel without having to hold them, said it was
listing 28 Swiss-franc hedged commodities securities on the SIX
"If investors don't want a currency view or are agnostic
about the forex market, these products take a lot of complexity
out of commodities investing, as most commodities are priced in
U.S. dollars," ETF Securities senior analyst Martin Arnold said.
That will allow investors to capture more precisely the
performance of commodities such as wheat or sugar, while
eliminating the effect of fluctuations in the dollar on returns.
"If there's smooth sailing, you're going to get a zero
return on currency exposure, rather than a potential gain or a
loss if you're unhedged," Arnold said.
This is ETF's first launch of commodity ETCs in Switzerland.
At the end of 2012, the group was responsible for almost $29
billion in global investor assets.
Conservative European investors outside of Switzerland who
want exposure to commodities but wish to avoid hedging prices
against the euro for fear of a break-up of the euro zone may
also see a benefit in the new products.
"If you are a European investor with money in Switzerland,
there is no cost to having a Swiss franc-hedged product rather
than a euro-hedged product," said Arnold.
"And in a worst case scenario and a break-up of the euro
zone, you have an implicit put on the euro-Swiss franc at no
Rima Haddad, ETF head of Swiss sales, said investors could
also use the products as directional currency bets alongside
their commodities exposure when they think the Swiss franc will
rally against the U.S. dollar.
(editing by Jane Baird)