Recent years have seen the launch of hundreds of new exchange-traded products, many of which offer increasingly granular exposure to various asset classes. The latest innovation comes in the commodity space, where Vermont-based Teucrium Trading LLC filed with the SEC for an ETF that invests in Chicago Board of Trade Corn Futures. The Teucrium Corn Fund (CORN) would hold a portfolio consisting of three separate corn futures contracts, including:
- 35% in the second-to-expire CBOT Corn Futures Contract
- 30% in the third-to-expire CBOT Corn Futures Contract
- 35% in the Corn Futures Contract expiring in the December following the expiration month of the third-to-expire contract.
So CORN would fall somewhere in the middle of the “contango” continuum for futures-based exchange-traded products. The fund would “roll” its holdings less frequently than ETFs like the United States Natural Gas Fund (UNG) that invest only in near-month contracts, but less frequently than UNG’s cousin, the United States 12 Month Natural Gas Fund (UNL), which invests in the near-month contract and the contracts for the following 11 months.
The impact of contango–an upward-sloping futures curve–on bottom line returns can be significant in commodity products, a fact some investors have learned the hard way (see Three ETFs That Could Be Crushed By Contango). The market for corn futures in currently contangoed; December 2010 contracts cost about 10% more than contracts expiring in July (the second-to-expire contract)....MORE
Tuesday, March 30, 2010
"Ready Or Not, Here Comes A Corn ETF" (CORN)
From ETF database: