How do you defend agricultural products trading when such funds exist ? http://teucrium.com/ 1% management fee to help ( stupid ) fund managers invest in 3 commodity contract expiries like they are so dumb they can't open a futures account...Check Clocks of " Bushels to meet world population growth" on the website...Check Obscure trust structure to avoid regulation and tax...Check ...
It can be created specifically to steal money in a "legitimized" manner. Market analysts write a "glowing" report on the fund. Institutional investors put money into the fund. The fund manager extracts it's management and incentive fees. The fund's brokers receive excessive commissions on trades. Part of all those fees are rebated "under the table" to the investors and analysts. Sure beats having to trade "competitively" for a living, doesn't it? :eek:
LOL...I am sure it beats trading competitively...1 % management fee to place 3 orders and report the results of the "fund"...I am sure they drop them at market by the way... Damn these guys must look so clean and bright when you meet them... impeccable suits, expensive dinners... What's more worrying than the obvious scam of the client is that they are offering access to food markets to a crowd of long-only clowns ...Whatever
TAGS Expense RatioExpense Ratio 0.55% While TAGS does not directly pay any management fees or certain other types of expenses, the Fund does pay certain expenses directly, including certain administrative and accounting expenses. In addition, the Fund bears a proportionate share of Underlying Fund expenses as a shareholder of the Underlying Funds. Each Underlying Fund pays management fees at an annual rate of 1.00% of its average net assets, brokerage charges, over-the-counter spreads and various other expenses of its ongoing operations (e.g., fees of the Administrator, Trustee and Distributor). Accordingly, the Fund has a total estimated expense ratio, including its proportionate share of Underlying Fund expenses, of approximately 1.94%* of net assets (not including the transaction fees paid by Authorized Purchaser when purchasing or redeeming Creation Baskets). These fees and expenses must be paid in all events, regardless of whether the Fund’s and Underlying Funds’ activities are profitable. Accordingly, each of the Underlying Funds must, on a net basis, realize interest income and/or gains on their Commodity Interests sufficient to cover these fees and expenses before the Underlying Fund can earn any profit. *As presented in the Form S-1 dated April 30, 2013.
I was invested in this in the rally of mid 2010 to mid 2011. Worked out fine for me. I was working at a place then where you could not open a personal futures account. If you actually ever worked in the financial business you would know that such employee limitations are extremely common in the financial industry. So you pay a fee to get the exposure you want.
I don't think CORN is the best example of outrageous fees. First, the NAV is about $92 million and their soybean, wheat and sugar products are all less than $12 million. If they're taking 1%, the mgmt firm *might* be making money on CORN but I doubt that's the case with the other products. Edit: I re-read the Feb 13 post above and it looks like the all-in costs are closer to 2% for TAGS which is similar to a fund of funds and therefore might be more expensive that the single commodity products. Regardless, assuming 2% for all the Teucrium products and given the current NAVs, CORN is probably profitable for the mgmt firm but I still doubt the others are, especially if you consider start up legal, regulatory and marketing costs. Second, even though the Teucrium products haven't caught on like some of the other commodity ETPs, from what I've seen they're less susceptible to roll risk and therefore perhaps better suited for someone seeking exposure for more than a few weeks or a few months. The far larger funds - mutual, ETF or ETP - that take a similar cut and under-perform the market or their index -- those are the ones that deserve scorn.