Deutsche Bank Launches Agricultural ETNs

April 16, 2008 

SAN DIEGO (ETFguide.com) - The maddening pace of new offerings has seemingly shifted from exchange-traded funds (ETFs) to exchange-traded notes (ETNs).

Over the past several months, Barclays Global Investors, Van Eck Global, and UBS have introduced an assortment of niche oriented ETNs.

Yesterday, Deutsche Bank introduced four leveraged and inverse performing ETNs that track a small basket of agricultural commodities.

The notes are as follows:

--DB Agriculture Double Short ETN (Ticker: AGA)
--DB Agriculture Double Long ETN (Ticker: DAG)
--DB Agriculture Short ETN (Ticker: ADZ)
--DB Agriculture Long ETN (Ticker: AGF)

The notes are linked to the Deutsche Bank Liquid Commodity Index - Optimum Yield Agriculture, which contains a basket of commodity futures on corn, soybeans, sugar, and wheat.

The DB Agriculture Double Short ETN is designed for investors that are ultra-bearish on agricultural commodities because it offers two times the monthly inverse performance of the agriculture index plus a monthly T-Bill index return. For bearish investors that don’t want leverage, the DB Agriculture Short ETN offer investors exposure to the monthly inverse performance of the gold index plus a monthly T-Bill index return.

"We are pleased to offer investors a simple way to take a short or leveraged view on the performance of agricultural commodities, especially in light of recent price fluctuations," said Kevin Rich, Managing Director in Deutsche Bank's Global Markets Investment Products group.

For investors that are extremely bullish on agriculture, the DB Agriculture Double Long ETN offers two times the monthly performance of the agriculture index plus a monthly T-Bill index return. The DB Agriculture Long ETNs offers exposure to the monthly performance of the agriculture index plus the monthly T-Bill index return, but without leverage.

ETNs are debt securities that track their underlying index (minus fees) without tracking error.

A disadvantage is that as debt securities, investors absorb the credit risk of the issuer.

The market price of an ETN isn’t just affected by the price of the underlying index or security, but the credit quality of the issuer. This is an important aspect to keep in mind as many financial institutions have been hit hard by the recent credit crunch.

Investors may trade ETNs at their market price or receive, at maturity or upon early redemption, a cash payment from the issuer based on the applicable index performance, less fees.

The Deutsche Bank notes are senior unsecured debt obligations that charge an annual fee of 0.75 percent and have 30-year maturities.