Category Archives: Teucrium

ETF Companies Seek Vanity Plates for Tickers

Rachel Louise Ensign wrote a funny story in the Wall Street Journal on ETF sponsors searching for memorable ticker symbols to help market their funds. Laura Morrison of the New York Stock Exchange says they’re like vanity plates on cars. But with 1,350 symbols already in use on the NYSE Arca, the biggest exchange for ETFs, and another 2,446 reserved for future products, it’s getting hard to find something catchy.

Ensign likes the literal, such as SOIL, the ticker for the Global X Fertilizers/Potash ETF, the figurative, such as DUST for the Direxion Daily Gold Miners Bear 3X Shares and the alluring, such as GGGG for the Global X Pure Gold Miners ETF.

My all-time favorite is humor, with MOO, the symbol for Market Vectors Agribusiness ETF. For literal, it’s hard to beat EGPT for Market Vectors Egypt Index ETF or CORN for the Teucrium Corn Fund. For figurative I like GULF for WisdomTree’s Middle East Dividend Fund
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The question on whether these vanity plates help a fund’s marketing efforts ends up with a big possibly considering the Global X Farming ETF, with the ticker BARN, gets ready to shut down this month.

Currency and Emerging Market ETFs Look Good for 2012

Since ETFs merely track asset classes or stock sectors, what works in ETFland is what worked in the markets in general. ETFs that tracked income producing dividend stocks, such as utilities and consumer staples, did very well, as did funds tracking U.S. Treasurys, oil and gold. Meanwhile, emerging markets took a big hit this year, as did alternative energy and natural gas.

In deciding whom to read on what will be the trends next year, I looked to the place with the most appropriate name, ETF Trends. Here are ETF Trends’ top five predictions and the ETFs to track these trends.

Currency ETFs: With more investors seeking to hedge currency risk, as well as use currency to make a bet on the Eurozone debt crisis, currency ETFs should see a lot of action next year.

Emerging Markets took a bath this year, mostly from surging inflation. But the truth remains that the biggest growth will be found in emerging markets. Of course, a lot of that growth comes from selling to Europe and the U.S. and if those two areas fall into recession, we could see emerging markets fall furthers. Still, the valuations have come a lot from their lofty prices at the start of 2011. With clean balance sheets and a rising middle class, emerging markets look attractive and even if they fall some, this is where the action will be in the coming years.

Bonds are still going to be winners. With the Federal Reserve promising not to raise interest rates for another year, we won’t see a huge sell off in U.S. Treasurys. And with more potential problems in Europe, Treasurys will continue to profit from investors looking for safety. But with yields so low, it may be time to put more money into corporate debt, or even emerging market bonds.

Commodities and the falling dollar:
While the dollar has risen lately, the broader trend remains down. Meanwhile, as people worry about massive money printing in Europe and the U.S., gold will come back, especially the SPDR Gold Shares (GLD).

While gold and gold ETFs rallied in 2011, surprisingly gold miner stocks tumbled. Typically, you see leverage in gold mining stocks, with moves three to four times the same direction as gold bullion. With David Einhorn thinking “that there is a major disconnect between miners and gold prices”, ETF Trends says Market Vectors Gold Miners (GDX) and Market Vectors Junior Gold Miners ETF (GDXJ) will move sharply higher in 2012.

Corn ETFs Get Creamed

ETFs that track corn got creamed today after the U.S. Department of Agriculture shocked the market with reports of larger-than-expected supplies and an increased forecast for the fall harvest.

The Teucrium Corn Fund (CORN) tumbled 8.7% to $40.50 and the iPath DJ-UBS Grains SubIndex Total Return ETN (JJG) sank 7.4% to $46.23 after federal regulators reported the number of acres planted this spring rose 5% to 92.3 million acres, the second highest planting since 1944.

This far exceeded analyst expectations of 90.7 million bushels as did the report that U.S. corn inventories as of June 1 fell 15% to 3.67 billion bushels instead of declining 23%. In early June corn prices rallied on expectations that the market would see shortages by the end of the summer.

The Teucrium Corn Fund is a commodity pool that holds three futures contracts, the second-to-expire CBOT Corn Futures Contract, weighted 35%; the third-to-expire CBOT Corn Futures Contract, weighted 30%; and the CBOT Corn Futures Contract that expires in the December following the expiration month of the third-to-expire contract, weighted 35%. The fund charges the exceptionally high expense ratio of 1.49%.

The iPath is an exchange-traded note, a debt instrument that doesn’t hold any assets. The Dow Jones-UBS Grains Subindex Total Return reflects the returns of three grains futures contracts.