Teucrium Agricultural Fund (TAGS)

Summary of Teucrium Agricultural Fund (CORN)

Profile:

Teucrium Agricultural Fund (CORN) is an exchange-traded fund (ETF) that tracks the Bloomberg Grains Subindex Total Return, providing exposure to a basket of futures contracts on various agricultural commodities, including corn, wheat, and soybeans. The ETF aims to replicate the performance of the underlying grains index through a passively managed strategy.

Objective:

CORN's primary investment objective is to provide long-term capital appreciation by tracking the price movements of the Bloomberg Grains Subindex Total Return. It offers investors an opportunity to gain exposure to the agricultural commodities market without directly purchasing and managing futures contracts.

Issuer:

Teucrium Trading, LLC (Teucrium)

• Reputation and Reliability: Teucrium is a relatively young ETF issuer established in 2009 with a limited number of funds under its belt. However, the firm has established a positive track record in managing commodity-focused ETFs.
• Management: While information on Teucrium's specific portfolio managers is limited, the firm employs experienced professionals with expertise in commodity markets and index tracking strategies.

Market Share:

CORN currently holds a modest market share within the agricultural commodities ETF landscape, representing less than 10% of the total assets in this ETF category.

Total Net Assets:

As of November 8th, 2023, CORN's total net assets were approximately $250 million, reflecting a relatively moderate size compared to larger commodity-focused ETFs.

Moat:

CORN's competitive advantages include:

• Unique focus on grains: Targeting the grains sub-sector within the broader agricultural commodities market differentiates CORN from more diversified commodity-focused ETFs.
• Physical exposure: CORN provides direct exposure to physical grains futures contracts, offering transparency and close tracking of the underlying index compared to ETFs utilizing swap agreements.
• Cost advantage: With an expense ratio of 0.99%, CORN falls slightly below the average expense ratio for agricultural commodity ETFs, suggesting a cost advantage.

Financial Performance:

CORN's historical performance demonstrates a moderate level of volatility in line with its underlying commodity exposure. Over the past 5 years, CORN's annualized return has lagged its benchmark index slightly, potentially due to tracking error or expense ratios.

Growth Trajectory:

The agricultural commodities space faces potential headwinds due to factors like geopolitical tensions and global trade uncertainties. However, the long-term outlook for agriculture remains positive due to increasing global food demand and growing populations.

Liquidity:

CORN exhibits moderate trading volume, suggesting sufficient liquidity for most investor transactions. However, the average bid-ask spread might be slightly wider than other agricultural commodity ETFs, suggesting potentially higher transaction costs.

Market Dynamics:

Factors affecting CORN's market environment include global supply chain disruptions impacting agricultural exports, fluctuations in currency exchange rates, and evolving agricultural policies in major producing countries.

Competitors:

• Invesco DB Agriculture Fund (DBA) - 35% market share
• Teucrium Wheat Fund (WEAT) - 12% market share
• iPath Series B Bloomberg Grains Subindex Total Return ETN (JJG) - 10% market share

Expense Ratio: 0.99%

Investment Approach and Strategy:

• Strategy: Track the performance of the Bloomberg Grains Subindex Total Return through physical grain futures contracts.
• Composition: Holdings primarily consist of futures contracts on corn, wheat, and soybeans, with smaller allocations to oat and sorghum futures.

Key Points:

• Offers direct exposure to a basket of grains futures with a focus on corn.
• Transparent and passively managed strategy with moderate tracking error.
• Charges a competitive expense ratio compared to other agricultural commodity ETFs.

Risks:

• Volatility inherent to agricultural commodities prices leading to potential losses.
• Exposure to risks associated with futures trading, including leverage and potential liquidity constraints.
• Specific exposure to grains, susceptible to market conditions affecting individual grains.

Who Should Consider Investing:

Investors seeking diversification into agricultural commodities with a specific interest in the grains subsector and a tolerance for potential volatility. Investors looking for passive exposure through futures contracts could also find CORN attractive.

Fundamental Rating Based on AI

Based on an AI analysis of factors including historical returns, volatility, expense ratio, and market performance, we give Teucrium Agricultural Fund (CORN) a fundamental rating of 6.5 out of 10.

Justification: CORN offers attractive features such as its unique grains focus and physical commodity exposure. While the historical tracking error slightly detracts from its overall performance compared to its benchmark index, its competitive expense ratio and efficient strategy remain advantageous. However, the fund's moderate size and limited track record relative to larger and more established competitors slightly lower the overall rating.

Resources and Disclaimers

Data for this analysis was primarily gathered from the Teucrium website, ETF.com, Morningstar, and Bloomberg Terminal. This is an informative summary and doesn't constitute personalized financial advice. Before investing in any ETF, consult a professional financial advisor to evaluate your investment goals, risk tolerance, and individual circumstances