ADZDB Agriculture Short ETN
ADZ Fund Description
The DB Agriculture Short ETN provides monthly inverse exposure to an index that tracks the performance of futures contracts on corn, soybeans, sugar and wheat.
ADZ Factset Analytics Insight
ADZ is, like most leveraged and inverse products, designed to provide -1x exposure to its index for a fixed period of time—monthly in this case. Investors holding it beyond the next monthly reset will be subject to the effects of compounding—a dynamic that can cause the note’s performance to drift from its promised -1x exposure. The note’s index tracks a single futures contract on four agricultural commodities: corn, wheat, soybeans and sugar. The index tracks the futures contract on each commodity determined to be least influenced by contango. The index measures the changes in price of the futures contracts, the returns from rolling those contracts over, and the cost of borrowing (collateral) as measured by the 3-month Treasury bill. Although its expense ratio is entirely reasonable compared with other inverse products, trading costs are of greater importance, since ADZ is designed for round-trip intraday trading. To that end, it’s nearly untradeable. Median volume is zero, meaning that most days, not a single share changes hands, and spreads are obscenely wide. Investors face substantial premiums or discounts, too, as the note is closed for creations, preventing arbitrageurs from doing their job.
ADZ CHARTS AND PERFORMANCE
ADZ Factset Analytics Block Liquidity
This measurement shows how easy it is to trade a $1 million USD block of ADZ. ADZ is rated a 5 out of 5.
Options Strategies for Outcome Investing
A collar strategy is a protective option strategy constructed by writing a call and buying a put with the same expiration date while being long the underlying security.
A covered call is an income strategy constructed by writing a call option against a holding of the underlying security.