Will Teucrium’s New ETFs Fly?

September 20, 2011

Teucrium's three new single-commodity ETFs, targeting soybeans, sugar and wheat are first-to-market products. But will anybody care?

The answer might depend on the specific fund.

The three new ETFs join a pre-existing trio from the firm—the Teucrium Corn Fund (NYSEArca: CORN), the Teucrium Natural Gas Fund (NYSEArca: NAGS) and the Teucrium WTI Crude Oil Fund (NYSEArca: CRUD).

Each of them is designed to invest in futures contracts that are optimal, in that they limit contango—when futures contracts grow pricier with each succeeding month, a nagging aspect of many futures markets that can kill futures-based investments.

Despite these contango-killing aspects that each of Teucrium’s ETFs have, CORN is the only one among them that has attracted significant assets.

AUM $119,308,656 $1,896,544 $5,363,689

The reason NAGS and CRUD haven’t taken off has more to do with their competitors than the funds’ respective strategies. Both NAGS and CRUD have multiple funds to compete with. So, until Teucrium’s relative newcomers prove they can outperform competitors, it’s likely they’ll have difficulty attracting assets.

CORN, on the other hand, is the only fund that gives investors pure exposure to the corn market, so it’s no surprise its assets make up almost 95 percent of all the money Teucrium has attracted to its funds.

So, with that background in mind, what is the competitive landscape for the new group of Teucrium Funds?


The Teucrium Soybean Fund (NYSEArca: SOYB) is the only fund that gives pure exposure to soybean futures. Previously, the best way to access soybeans was by buying a fund that specializes in grains, a segment of the ETF market that currently makes up $328 million in assets under management.

Unfortunately, that might not have provided as much exposure to soybeans as some investors want and, moreover, it also mixes in corn and wheat.

SOYB invests 35 percent in second-to-expire contracts, 30 percent in third-to-expire, and the final 35 percent in the November following the expiration month of the third-to-expire contract.

I think it’s fair to assume that, as the only fund with full exposure to soybeans, SOYB will attract a reasonable amount of assets. Still, I think it’s unlikely that it will become as large as CORN. After all, global corn production, on a dollar basis, is almost twice as high as soybean output.


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