What Are Coffee ETFs?

Exchange-traded products offer investors an opportunity to establish exposure to coffee prices without having to worry about rolling futures exposure as expiration approaches. Moreover, coffee ETPs deliver exposure at a relatively low price point and offer impressive liquidity and transparency. For U.S. investors, the best option for coffee exposure is the iPath Dow Jones-UBS Coffee Total Return ETN (JO), which is linked to the performance of an index comprised of coffee futures. As such, investors should be aware that JO does not offer exposure to spot coffee prices, and that the slope of the futures curve will impact returns. Moreover, it should be noted that JO is an ETN, which means that investors are exposed to the credit risk of the issuing institution.

European investors may have more ETF options for coffee exposure; ETF Securities offers both leveraged and short coffee products in addition to a plain vanilla 1x ETF.

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