Market Overview

The Most Disappointing ETF?


Before we disclose the nominee for most disappointing ETF, let's get a couple of things out of the way. First, it's not even an ETF, it's an ETN, which could provide some clues about where we're going. Second, the Professor will admit he did recommend this trade to subscribers of his premium service a while back. Lesson learned and apologies extended.

Without further ado, today's nominee for the most disappointing ETF is the iPath DJ-UBS Livestock TR Sub-Index ETN (NYSE: COW).

COW has frequently been touted as a way to play rising livestock prices as the ETN devotes a tad less than two-thirds of its weight to live cattle futures contracts and the rest goes to lean hogs.

So what's the problem? Easy question to answer. While futures contracts for cattle and hogs have been on fire until recently, COW has not been. For those that like to play with charts, overlay live cattle, lean hogs and COW over the last six months. COW is downright pathetic by comparison.

The overall outlook for ag commodities is still bullish and that means investors need to find other ways to play the trend because COW isn't the answer.

The PowerShares DB Agriculture (NYSE: DBA) is certainly one way of doing so. DBA provides exposure to feeder cattle, cocoa, coffee, corn, cotton, lean hogs, live cattle, soybeans, sugar, and wheat, all with various weights and DBA has also left COW in its wake over the past six months.

The Professor is mad about COW. Mad that he fell for this ETN's tricks and even more mad that other ETF commentators continue to do the same. Simply put, anyone that says COW is a way to establish a bullish stance on cattle and hogs is wrong.

Posted-In: Long Ideas News Short Ideas Specialty ETFs Futures Commodities Intraday Update Trading Ideas


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