Contango Definition

Contango Definition

Learn the definition of contango and other ETF terminology from the glossary.

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Edited by: Staff

Learn more about Contango

Contango refers to a situation in the futures market where the futures price of an asset is higher than its spot price. In the context of exchange-traded funds, or ETFs, contango commonly arises when the fund invests in futures contracts. Investors may experience diminished returns due to the fund buying more expensive futures contracts to maintain its strategy. This can lead to an erosion of value over time as contracts are rolled forward. Contango is a crucial consideration for ETF investors, impacting performance and highlighting the importance of understanding the fund's underlying assets and the structure of its investment strategy.

Related Terms

Backwardation, Futures

ETF Glossary is’s collection of key terms and definitions related to exchange-traded funds. ETFs are investment funds that are traded on stock exchanges, and they can encompass a wide range of asset classes, including stocks, bonds, commodities and more. Given the diverse range of ETFs and the complexity of financial markets, having a clear understanding of ETF-related terminology is instrumental for investors looking to make informed decisions, manage risks effectively and navigate the evolving landscape of ETF investments.