Exchange-traded products (ETPs) let investors trade individual asset classes like shares of stock. The Vanguard Total Bond Market ETF, for example, lets investors with a brokerage account buy and sell the equivalent of bonds, and other ETFs offer exposure to gold, silver, real estate, and other alternative asset classes. With the exception of precious metals, which receive different tax treatment due to their historical role as money, commodities have mostly failed to make the leap to the ETF world, and we have Uncle Sam to thank for that.

That’s because companies that derive a percentage of their income from commodities trading that’s above a certain threshold set by the government are taxed differently from companies that do the same thing with stocks and other asset classes, putting would-be commodities funds at a steep disadvantage. Indeed, investors in a fund attempting to purely trade commodities within a mutual fund or ETF structure would be responsible for filing K-1 tax forms not only at the federal level, but possibly in multiple states!

Clearly, investors could benefit by gaining easier access to the commodities markets through the development of commodities ETPs, and hopefully laws will eventually be reformed to level the playing field for commodities. Until then, however, investors interested in gaining commodity exposure through a ’40 Act fund will be happy to learn about the recently debuted iShares Commodities Select Strategy ETF (ticker: COMT). launched by BlackRock on October 16.

In a press release announcing its launch, BlackRock’s Patrick Dunne said that the iShares Commodities Select Strategy ETF provides investors with “comprehensive commodity exposure in a simple, efficient way” by removing the tax barrier that may have kept investors away from commodities. “We believe commodities play an important role in investors portfolios, but investing in them can be a challenge,” he said.

BlackRock’s new fund addresses that challenge and skirts the IRS’s treatment of commodities by investing a significant portion of its assets in commodity-sensitive equities. As of October 31, the fund’s held sizable investments in municipal bonds, 118 stocks from the energy sector, and stocks from a variety of other sectors, in addition to commodities contracts. These equity holdings ensure that the iShares Commodities Select Strategy ETF isn’t taxed like a commodities trading business would be, and instead is treated like a regular ETF.

A triumvirate of portfolio managers share responsibility for the day-to-day operations of the fund: Michael Gates, Greg Savage, and Robert Shimell are all experienced commodities professionals responsible for developing and implementing the fund’s investment process and investment strategy. The team uses a “roll methodology” designed to minimize the negative return impact of “contango” – which is what happens when the future price of a commodity is above the expected future spot price.

Shares of the iShares Commodities Select Strategy ETF trade on the Nasdaq under the ticker symbol “COMT.” Walt Smith, Vice President, Head of U.S. Equities at Nasdaq, said his company is “thrilled” to welcome BlackRock’s “unique” ETF to the Nasdaq family of listed companies and ETPs. “As an operator of leading electronic trading venues in multiple asset classes including cash equities and fixed income, we continue to facilitate various investment opportunities in these products,” he said.