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Episode 67: Commodities (The Roll Cost Trap)
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Episode Summary
Many Canadian investors seek direct commodity exposure through futures-based ETFs, such as oil funds, to avoid storing physical assets. However, these funds can suffer from a devastating mismatch where the underlying spot commodity rises, yet the ETF loses a substantial portion of its value. This episode explains the mechanics of this phenomenon, which is driven by the structural reality of "rolling" expiring futures contracts. In a normal market structure known as…
The skinny
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