10-Q: iShares S&P GSCI Commodity-Indexed Trust Reports Q3 2024 Results: Net Asset Value Declines Amid Share Redemptions

The iShares S&P GSCI Commodity-Indexed Trust experienced a decrease in net asset value during the third quarter of 2024, primarily due to share redemptions and a net loss from operations.

Summary

• The iShares S&P GSCI Commodity-Indexed Trust's net asset value decreased from $1,098,519,705 on June 30, 2024, to $881,380,256 on September 30, 2024.
• This decrease was mainly due to a reduction in outstanding shares from 49,500,000 to 42,000,000, driven by significant share redemptions.
• The Trust experienced a net decrease in net assets from operations of $59,879,999 for the quarter, which included a net realized and unrealized loss of $70,955,953, partially offset by a net investment income of $11,075,954.
• The net asset value per share decreased by 5.41% from $22.19 to $20.99 during the quarter, reflecting a 6.51% decrease in the settlement price for the Index Futures, partially offset by interest income from U.S. Treasury bills.
• For the nine-month period ended September 30, 2024, the net asset value decreased from $968,051,679 to $881,380,256, with a net increase in net assets from operations of $36,958,771.
• The net asset value per share increased by 4.53% from $20.08 to $20.99 over the nine-month period, reflecting a 1.12% increase in the settlement price for the Index Futures, and interest income from U.S. Treasury bills.

Sentiment

Score: 3

Explanation: The document indicates a negative sentiment due to the decrease in net asset value, net loss from operations, and significant share redemptions. While there was some positive investment income, the overall performance was worse than expected.

Positives

• The Trust generated a net investment income of $11,075,954 for the quarter.
• The Trust generated a net investment income of $34,004,581 for the nine-month period.
• The net asset value per share increased by 4.53% over the nine-month period.

Negatives

• The Trust experienced a significant decrease in net asset value during the quarter.
• There was a substantial decrease in outstanding shares due to redemptions.
• The Trust incurred a net loss from operations of $59,879,999 for the quarter.
• The Trust had a net realized and unrealized loss of $70,885,476 on futures contracts for the quarter.
• The Trust had a net realized and unrealized loss of $169,987 on short-term investments for the nine-month period.

Risks

• The Trust is exposed to commodity price risk through its holdings of Index Futures, which can be volatile.
• The Trust is subject to interest rate risk, which can negatively impact the value of its U.S. Treasury bill holdings.
• The Trust faces credit risk from potential defaults by the CME's clearing house or its futures commission merchant.
• The limited number of market participants in the Index Futures market could exacerbate losses if the Trust needs to liquidate its positions.
• The Trust's performance is directly linked to the S&P GSCI-ER, and any fluctuations in this index will affect the value of the Shares.

Future Outlook

The Trust seeks to track the investment returns of the S&P GSCI Total Return Index before payment of the Trust's expenses and liabilities, and the Trust will continue to roll out of existing positions in Index Futures and establish new positions in Index Futures on an ongoing basis.

Management Comments

• The duly authorized officers of the Sponsor have evaluated the effectiveness of the Trust's disclosure controls and procedures and have concluded that they were effective.
• The Sponsor does not make forward looking statements unless it believes it has a reasonable basis for doing so, but cannot guarantee their accuracy.

Industry Context

This report reflects the performance of a commodity-indexed trust, which is influenced by the volatility of commodity markets and the performance of the S&P GSCI index. The decrease in net asset value and share redemptions may indicate investor sentiment towards commodity investments during this period.

Comparison to Industry Standards

• The iShares S&P GSCI Commodity-Indexed Trust is designed to track the S&P GSCI Excess Return Index, a benchmark for commodity futures performance.
• Comparable commodity ETFs include the Invesco DB Commodity Index Tracking Fund (DBC) and the Bloomberg Commodity Index Tracking ETF (BCOM), which also track broad commodity indices.
• The Trust's performance is directly tied to the futures market, and its results should be compared to the performance of the S&P GSCI index and other similar commodity-tracking products.
• The Trust's expense ratio of 0.75% is within the range of similar commodity ETFs, but investors should consider the impact of trading costs and tracking error.
• The Trust's reliance on a single futures contract and a limited number of market participants is a unique risk factor that is not present in all commodity ETFs.

Stakeholder Impact

• Shareholders experienced a decrease in the value of their holdings due to the decline in net asset value.
• Authorized Participants were able to redeem shares, which contributed to the decrease in outstanding shares.
• The Sponsor continues to receive fees for managing the Trust.
• The Trust's performance is directly linked to the S&P GSCI-ER, and any fluctuations in this index will affect the value of the Shares.

Next Steps

• The Trust will continue to roll out of existing positions in Index Futures and establish new positions in Index Futures on an ongoing basis.
• The Trust will continue to monitor market conditions and the performance of the S&P GSCI index.

Key Dates

Keywords

Commodity Futures, S&P GSCI, Index Futures, Net Asset Value, Share Redemptions, Commodity Pool, Treasury Bills, Derivatives, Exchange Traded Fund