It was not just equities that vaulted higher earlier this week but Agricultural commodities popped around the same time that Vladimir Putin spent some time addressing the economic situation of Russia on Thursday.
Benchmark “Ags” ETF DBA (PowerShares DB Agriculture, Expense Ratio 1.01%) is back above $25 after trading below this level briefly on Wednesday of this week, which temporarily was the lowest level for the fund since January of this year.
Collectively, agricultural prices rallied swiftly in the early spring, with DBA actually eclipsing $29 by May, only to sink back to current levels over the span of about six to seven months. DBA has its highest exposures at the moment to Sugar futures (>13.3%), Live Cattle futures (>12.6%), Corn Futures (>12.1%), Soybeans (>10.6%), and Cocoa (>10%).
DBA has seen a notable $209 million flow out year to date, but the fund still has north of $1 billion in overall assets under management and is the giant in the Agricultural ETF category in the U.S., dwarfing the next largest fund in the space RJA (ELEMENTS Rogers International Commodity Index- Agriculture Total Return ETN, Expense Ratio 0.75%) which has about $185 million in AUM.
RJA started to turn the corner performance wise a bit earlier than DBA, having rallied throughout the month of December for the most part. We see that the highest weightings in the fund are currently Corn (13.61%), Wheat (13.61%), Cotton (12%), Soybeans (10.02%), and Coffee (5.73%), so clearly a different mix at the moment on the top end than DBA. JJG (iPath DJ-UBS Grains Total Return Sub-Index ETN, Expense Ratio 0.75% is about the same size as RJA in terms of AUM with $183 million, but we note that it is a “Grains specific” product as opposed to providing broad agricultural commodity exposure.
In spite of having twenty nine different ETP offerings at the moment categorized in the greater “Agricultural commodity” space, there is under $2 billion in collective assets in the segment, and we are reminded that $1 billion of that comes from DBA’s heft.
There are several interesting and very targeted strategies that laser in on one specific commodity, such as Sugar, Coffee, Cocoa, Soybeans, or Livestock for example, some structured as ETNs and even some ETFs for those portfolio managers that may have a specific preference for one or the other, that remain largely untapped thus far in terms of lower asset levels and in some cases dramatically low average daily trading volumes.
PowerShares DB Agriculture Fund
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