ETF Showdown: Pour Some Sugar on Me

When it comes to commodities, sugar is among the most volatile. So if your portfolio has a sweet tooth, it's probably best to stay out of the sugar futures market. That said, the exchange-traded products offering exposure to sugar aren't for the timid investor.

One such product is the iPath Dow Jones-UBS Sugar Subindex Total Return ETN (NYSE: SGG), which made its debut in June 2008 and has been the default sugar ETP in that time. At $69.8 million in assets under management, SSG actually has a pretty decent haul for ETNs of this variety, but now the sugar ETN faces competition and we have a ourselves a sweet ETF Showdown.

Enter the Teucrium Sugar Fund (NYSE: CANE), which isn't even a month old and has already attracted almost $2.5 million in AUM. That's a solid start, particularly in environment that has been punishing too riskier assets.

Since the Teucrium Sugar Fund is so new, we're not going to compare its performance against SGG's because that comparison would not be relevant. CANE has an expense ratio of 1%, 25 basis points higher than SGG's.

In theory, CANE should be the more cost-effective fund because of its structure and maybe the fees will come down as the ETF matures. Even with the higher fees, there is good reason to like CANE. As is the case with most of the Teucrium lineup, CANE has been specifically designed to mitigate situations which are commonly referred to as "contango" and "backwardation."

On the other hand, SSG holds just one futures contract and rolls every month to pick up the next month's contract. Put another way, CANE rolls its contracts four times per year. SSG rolls 12 times.

This is how CANE breaks down: It holds the second-to-expire Sugar No. 11 Futures Contract, weighted 35%, the third-to-expire Sugar No. 11 Futures Contract, weighted 30%, and the third-to-expire contract, weighted 35% e Sugar No. 11 Futures Contract expiring in the March following the expiration month of the third-to-expire contract, according to Teucrium's Web site.

SGG basically follows a subindex that tracks a single sugar futures contract. And if you must know, CANE has slightly outperformed SGG since its debut, though there is no guarantee that will be the pervasive trend since we're evaluating a small amount of trading days. Still, we're crowing the rookie sugar as the better way for satisfying a craving for something sweet and profitable.