Michael Johnston: Teucrium, the Vermont-based firm behind a growing lineup of exchange-traded commodity products, announced today the launch of a new fund targeting agricultural resources. The Teucrium Agriculture Fund (NYSEARCA:TAGS) will offer equal exposure to the “big 4″ of the agriculture commodity space: sugar, corn, wheat, and soybeans [see also Special Report: In Search Of The Best Commodity ETP ]. TAGS will be structured as a fund-of-funds, as the underlying holdings of the product will be shares of existing single-commodity ETPs that the issuer has already debuted. Specifically, TAGS will consist of equal allocations to (NYSEARCA:CANE), (NYSEARCA:CORN), (NYSEARCA:WEAT), and (NYSEARCA:SOYB).
Agriculture ETFs In Focus
TAGS is the 28th product in the Agricultural Commodities ETFdb Category, and the seventh to offer exposure to a broad basket of agricultural commodity futures. The Teucrium product will be differentiated from the competing offerings in a couple of primary ways. First, the underlying products take a unique approach to accessing the underlying commodities; the single commodity ETPs that make up TAGS spread exposure across a few different maturities in an attempt to mitigate the potentially adverse impact of contango on returns [see also Commodity Guru ETFdb Portfolio ].
Second, TAGS will be a bit more targeted than most other agriculture ETPs, focusing only on the major commodities in this segment. The PowerShares DB Agriculture Fund (NYSEARCA:DBA), which is the most popular ag ETF with about $2 billion in assets, casts a much wider net. In addition to sugar, corn, wheat, and soybeans–which make up about 50% of the portfolio–that fund holds cattle (16.7%), cocoa (11.1%), coffee (11.1%), cotton (2.8%), and lean hogs (8.3%). Other broad agriculture ETPs, such as (NYSEARCA:JJA), feature similar compositions. So the new Teucrium fund will offer an alternative for those interested in concentrating exposure in the big four ag commodities [see 50 Ways To Invest In Agriculture].
“TAGS was designed as a fund of ETPs to allow investors to allocate investments in the four core agricultural commodities without having to rebalance their exposure themselves,” said Sal Gilbertie, President and Chief Investment Officer of Teucrium Trading, LLC. ”By using the fund of ETPs structure, we are not only providing investors with a greater degree of diversification, we are providing them with the same unique investment methodology used in each of the underlying Teucrium commodity funds. Investors now have a way to invest in a next-generation agricultural basket ETP that may be a better option than currently available alternatives.”
TAGS is the seventh ETF from Teucrium; in addition to the products that make up the underlying portfolio, the company also offers funds focusing on crude oil (NYSEARCA:CRUD) and natural gas (NYSEARCA:NAGS)
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