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USCF Cuts Ag ETF Fee To Compete With DBA

Cinthia Murphy


United States Commodity Funds, the firm behind the $1.03 billion United States Oil Fund (USO - News), cut the management fee it charges for its United States Agriculture Index Fund (USAG - News) by nearly 16 percent to better its chances against its main competitor, the PowerShares DB Agriculture Fund (DBA - News).

USAG, a futures-based agriculture portfolio, now has an annual managementt fee of 0.80 percent -- from 0.95 percent previously – and is just cheaper than futures-based DBA, which comes with a 0.85 percent price tag.

The move is simply targeted at improving U.S. Commodity Funds’ competitive edge, the company’s chief investment officer John Hyland told IndexUniverse in a recent telephone interview.

Commodities ETFs, in general, have been under pressure from still-growing investor concerns that Europe's financial troubles could be far from over, and that demand coming from China is slowing, factors that could put into question global aggregate demand going forward.

From a performance standpoint, DBA hasn’t necessarily shined, having shed some 10.5 percent of value year-to-date and more than 3.6 percent in the past month alone. USAG has also come to market with a rocky start, having dropped 4.2 percent since April.

A look at flows also shows that DBA has also lost some ground in terms of assets. The PowerShares fund has had outflows of nearly $200 million since the end of last year. USAG has attracted $1.19 million since it came to market, according to data compiled by IndexUniverse.

But USAG still has a lot of ground to make up if it’s to catch up to DBA’s overall popularity with investors. USAG has a mere $3.5 million in assets, while DBA boasts more than $1.67 billion in assets.

Just last week, U.S. Commodity Funds also cut management fees on its U.S. Copper ETF (CPER - News), that time by as much as 35 percent, to make CPER more cost-competitive against the dominant security in that space, iPath Pure Beta Copper ETN (CUPM - News).  CUPM has $2.3 million in assets, while CPER has $2.38 million, according to data compiled by IndexUniverse.

U.S. Commodity Funds manages 11 commodities ETFs with more than $3 billion in total assets.

This article has been updated to clarify that USAG was launched in April, and thus its previously-mentioned year-to-date performance was not relevant in a comparison against DBA's year-to-date performance.


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