Providers defend futures-based ETCs

ETPs that use futures to provide exposure to the spot price changes of a commodity are subject to the cost of replacing existing contracts as they come close to maturity. If the market is in contango, the selling price of the expiring contract is lower than the cost of its replacement and the fund will incur a loss. Conversely in backwardation, the new contract is cheaper and the fund gains. The American Securities and Litigation Consulting Group has published a paper Futures-Based Commodities ETFs claiming these costs lead to "pervasive underperformance" which "calls into questi...