Recent headlines regarding potentially tainted beef for sale in supermarkets in the U.S. have surfaced, no less right before the official grilling season kickoff Memorial Day and this has us looking at a small and perhaps under-covered segment of ETPs.
COW (iPath DJ-UBS Livestock Total Return Sub-Index ETN, Expense Ratio 0.75%) has been around since 2007, and is the largest ETP in the “Livestock” sub-category that falls within the broader universe of Agricultural Commodities. The fund only has about $55 million in assets under management, and averages just south of 40,000 shares on an average daily trading basis, so clearly this space is not utilized by a wide breadth of retail or
institutional investors as of yet.
COW is a futures-based ETN and fund literature shows us that there are two holdings inside of COW, Live Cattle and Lean Hogs futures, both of which will clearly be on the menu at many cookouts this weekend in the form of burgers or perhaps ribs, making this a seasonal and perhaps timely feature today.
COW actually dipped more than 1% right out of the gates this morning before recovering somewhat to current price levels, yet volume in the product has remained rather low all week.
Two much smaller products also operate in the Livestock space, being UBC (ETRACS CMCI Livestock Total Return ETN, Expense Ratio 0.65%) and LSTK (iPath Pure Beta Livestock ETN, Expense Ratio 0.75%), and these two funds only have $5.4 and $3 million in assets under management respectively, which mostly looks like seed capital. We do not see an ETF listed that specifically focuses on the Livestock sector as of yet, but another product that is worth mentioning is FUD (ETRACS CMCI Food Total Return ETN, Expense Ratio 0.65%).
This product is not “Livestock” specific but also has exposure to other agricultural futures such as those of Wheat, Corn, Soybeans, Sugar, Cocoa, and so forth. Live Cattle and Lean Hogs make up about 13% of the overall basket in total in FUD.
Still, for broad based “Agricultural Commodity” exposure investors often look to DBA (PowerShares DB Agriculture Fund, Expense Ratio 1.01%) which dominates the space in terms of its asset size currently ($1.5 billion in
AUM where the second largest fund in the space only has $235 million in AUM).
Generally it looks like there is a ton of room for asset growth and awareness in this space, not only among “Livestock” oriented funds but in this greater Agricultural Commodity space in that there are
thirty different ETPs operating in the space, but the average fund AUM size (excluding the largest, DBA) is only about $31 million, and there are seventeen products toiling below the dreaded $10 million AUM mark currently in relative obscurity.
iPath Dow Jones-UBS Livestock Total Return Sub-Index ETN
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