iPath Dow Jones AIG Cocoa Total Return ETN

There are now currently over 1,000 ETFs that any investor is able to trade in their brokerage accounts. Any new ETF that is introduced tends to be quite unique, as most markets and sectors already have an ETF covering them.

This is the case with this new fund, introduced last summer, which follows the price of Cocoa. As per the issuer's website, this fund is:

intended to reflect the returns that are potentially available through an unleveraged investment in the futures contracts on physical commodities comprising the index as well as the rate of interest that could be earned on cash collateral invested in specified Treasury Bills. The Dow Jones-AIG Cocoa Total Return Sub-IndexSM is a single-commodity sub-index currently consisting of one futures contract on the commodity of cocoa, which is included in the Dow Jones-AIG Commodity Index Total Return

The chart below shows the funds performance since its inception in July:

Interestingly, Cocoa has been one of the few commodities (other than gold, and perhaps Uranium) that has broken its downtrend and has shown strength.

A commodity that shows strength in the face of a severe commodity bear market is something to take note of, in my opinion.

However, there are some issues with this fund, in my view. Firstly, this fund is thinly traded, so there is liquidity risk. Secondly, because this is an ETN, there could be potential counter-party risk, although this is probably unlikely.