There is an investment opportunity that gives a tax treatment with an edge over exchange traded funds (ETFs). TRAKRs are futures contracts but differ from the usual commodities contracts in that buyers don’t use leverage. Rep.Investing states that TRAKRs (total return asset contracts) don’t expose retail buyers to the overhanging threat of mark-to-market margin calls.They are paid in full like cash-settled stock purchases, long TRAKRs are unlevered. With a maturity rate of 4.5 years, TRAKRs have turned futures investing into buy-and-hold portfolio assets. The underlying asset is a proprietary index rather than a physical commodity.
ETFs must be held for one year to be considered long term holdings. For advisors desiring commodity exposure for their clients, (TRAKRs) that’s a great advantage. A commodity trend lasting only eight months can receive long-term capital-gains treatment with TRAKRs. It’d be a short-term gain or loss for an ETF.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.