Teucrium: Investor Education Series
Jake Hanley, Managing Director / Sr. Portfolio Strategist | March 7, 2022
This is the second in a series of short educational commentaries designed to help better educate the investing public at large.
Given the recent volatility in commodity markets in general, and historical trading volume the Teucrium Wheat ETF (ticker WEAT) we thought it would be helpful to discuss the continuous offering feature as it relates to ETFs.
We will begin with a brief definition and then move on to explain why it matters to investors.
If you have any questions or if you have ideas for additional educational topics, please feel free to email them to us at contact@teucrium.com
Thank you.
Continuous Offerings
Exchange Traded Funds are continuous offering products which means shares are continually offered as investor demand requires. In the past, ETF Sponsors had to register for a fixed amount of shares before issuance and re-register for additional shares as needed. Recently enacted new rules eliminate the need for additional filings prior to issuance of shares; as new Prospectuses are filed across the industry, the new rules take effect allowing ETF Sponsors to issue as many shares as the market demands without the finite limits.
Why it Matters
Under the old rules it is possible for a fund sponsor to sell all registered shares. When this happens, the fund may continue to trade, yet no additional shares will be immediately available for issuance. Therefore, there will be a period when there is a fixed number of shares available to be traded. If demand exceeds supply, the fund’s shares may trade at a premium to their net asset value. Importantly, once new shares have been registered and approved the fund sponsor will once again be in the position to make a continuous offering as demand requires. At that time, it is likely that the fund’s market price will more accurately reflect the fund’s net asset value.
About Teucrium
Our mission is to make it easier for investors to gain price exposure to alternative investments. We believe investors can build more resilient portfolios by diversifying across capital markets and allocating to a variety of different asset classes.
Listed on the New York Stock Exchange, our funds deliver alternative market access through a brokerage account.
Experience Matters
The Teucrium Team has over 70 years of combined trading experience. Since our founding in 2010 Teucrium has exclusively offered access to alternative markets through ETFs. We revolutionized the way commodity ETFs are structured by tailoring our funds according to the unique characteristics of each underlying market.
Financial markets are ever evolving, and investors are constantly seeking better access to diverse markets and strategies. Teucrium continues to research and develop new products to further our mission of making alternative markets more easily accessible.