Teucrium Trading on Wednesday launched an exchange traded fund focused on the agriculture sector. It will offer commodities exposure in one single fund of ETFs. The new fund will give investors exposure to four core agricultural commodities, sans futures contracts.
The ETF will invest in corn, soybeans, wheat and sugar.
The new Teucrium Agricultural Fund (NYSEArca: TAGS) is a blend of four Teucrium funds already trading:
- Teucrium Corn Fund (NYSEArca: CORN) Tracks futures contracts on the CBOT, or Chicago Board of Trade.
- Teucrium Soybean Fund (NYSEArca: SOYB)Tracks futures contracts on the CBOT, or Chicago Board of Trade.
- Teucrium Sugar Fund (NYSEArca: CANE) Tracks futures contracts on the ICE Futures US.
- Teucrium Wheat Fund (NYSEArca: WEAT) Tracks futures contracts on the CBOT, or Chicago Board of Trade. [Grains, Corn ETFs Caught in Sharp Downdraft]
The new ETF will avoid futures contracts, which will mitigate the risk of contango and backwardation. Contango occurs when the futures price is above the expected future spot price. Backwardation occurs when the futures contract approaches expiration, the contract will trade at a higher price compared to when the contract was further away from expiration.
On average, each ETF of the underlying funds will get about 25% representation. The funds assets will be re-balanced daily to maintain the 25% allocation. TAGS will have an expense ratio of 0.32%. [Agriculture ETFs May Sprout on Reflation Trade]