Daily ETF Watch: Spotlight On Spot Prices

AccuShares is looking to give investors access to spot prices on a range of commodities.

AccuShares has put into registration 12 commodity ETFs—six long and short pairs—that hold the promise of helping investors steer clear of contango and other vagaries of the futures market that detract from returns. Each bull-and-bear pair is organized around a separate “underlying index,” and tracks changes in the spot prices of the respective commodities, according to the preliminary prospectus.

The prices are published as index values by S&P Dow Jones Indices LLC, according to the filing. The funds’ basic premise is that investors who own spot don’t have to worry about contango, but rather just the value of the commodity. Spot prices are what a given commodity costs in real time in actual physical markets.

Futures-based investing via ETFs has opened up new non-correlated vistas, but has come with challenges, such as contango. Contango is market jargon used to describe the so-called normal futures curve, wherein contract prices are higher with each succeeding month.

That means investors lose money when they sell an expiring contract and replace with the next, more expensive, one. That can be quite deleterious to returns over time.

The proposed securities, presented below as six pairs of “up” and “down” funds, their tickers and their annual expense ratios are as follows:

• AccuShares S&P GSCI Spot Up Shares (GSCU) and AccuShares S&P GSCI Spot Down Shares (GSCD)—both with annual expense ratios of 75 basis points, or $75 for each $10,000 invested
• AccuShares S&P GSCI Agriculture and Livestock Spot Up Shares (AGUP) and AccuShares S&P GSCI Agriculture and Livestock Spot Down Shares (AGDN)—both with annual expense ratios of 75 basis points, or $75 for each $10,000 invested
• AccuShares S&P GSCI Industrial Metals Spot Up Shares (MTLU) and AccuShares S&P GSCI Industrial Metals Spot Down Shares (MTLD)—both with annual expense ratios of 75 basis point, or $75 for each $10,000 invested
• AccuShares S&P GSCI Crude Oil Spot Up Shares (SPTU) and AccuShares S&P GSCI Crude Oil Spot Down Shares (SPTD)—both with annual expense ratios of 45 basis points, or $45 for each $10,000 invested
• AccuShares S&P GSCI Brent Oil Spot Up Shares (BRTU) and AccuShares S&P GSCI Brent Oil Spot Down Shares (BRTD)—both with annual expense ratios of 45 basis points, or $45 for each $10,000 invested
• AccuShares S&P GSCI Natural Gas Spot Up Shares (NGUP) and AccuShares S&P GSCI Natural Gas Spot Down Shares (NGDN)—both with annual expense ratios of 60 basis points, or $60 for each $10,000 invested

Each fund will hold only cash, short-dated U.S. Treasurys or collateralized U.S. Treasury repurchases and will NOT invest in commodities, futures, swaps or other assets, according to the prospectus.

The index provider makes the official calculations of the value of the underlying indexes. The filing said that those calculations are continuous now and are reported under the following Reuters Instrument Codes (RICs):

• S&P GSCI Spot: Reuters RIC: .SPGSCI
• S&P GSCI Agriculture and Livestock Spot: Reuters RIC: .SPGSAL
• S&P GSCI Industrial Metals Spot: Reuters RIC: .SPGSIN
• S&P GSCI Crude Oil Spot: Reuters RIC: .SPGSCL
• S&P GSCI Brent Crude Spot: Reuters RIC .SPGSBR
• S&P GSCI Natural Gas Spot: Reuters RIC .SPGSNG

The prospectus noted that these proposed securities are not suitable for all investors and are very different from most mutual funds, exchange-traded funds, commodity pools and other exchange-traded products.

Filings

State Street Global Advisors has put into registration a cadre of factor-based funds spanning the developed markets at a time when these markets are showing signs of a slowdown and investors are looking into every corner of the globe for yields.

The funds will track their respective MSCI indexes, which will select securities based on a combination of three factors—value, quality and low volatility, according to a regulatory filing.

The proposed funds include:

• SPDR MSCI Australia Quality Mix ETF
• SPDR MSCI Canada Quality Mix ETF
• SPDR MSCI China Quality Mix ETF
• SPDR MSCI France Quality Mix ETF
• SPDR MSCI Germany Quality Mix ETF
• SPDR MSCI Japan Quality Mix ETF
• SPDR MSCI Mexico Quality Mix ETF
• SPDR MSCI Netherlands Quality Mix ETF
• SPDR MSCI South Korea Quality Mix ETF
• SPDR MSCI Spain Quality Mix ETF
• SPDR MSCI Sweden Quality Mix ETF
• SPDR MSCI Switzerland Quality Mix ETF
• SPDR MSCI United Kingdom Quality Mix ETF

Associated fees and tickers for the fund were not disclosed in the filing.