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Best agriculture ETFs to buy in 2022
In this guide we pick out some of the leading agriculture ETFs available and explain the most important features of each one. Get a quick overview of what’s out there, the benefits of using ETFs, and why these five are the best way to meet your agricultural needs.
What are the top agriculture ETFs to buy?
Our experts have ranked their top picks in the table below. It includes all the information you need to invest in one straight away, and you can simply head to a broker and enter the ETF symbol to do so now. Alternatively, keep reading to learn more about why each fund has been chosen.
|#||ETF symbol||ETF name|
|1||DBA||Invesco DB Agricultural Fund|
|2||CORN||Teucrium Corn Fund|
|3||VEGI||iShares MSCI Global Agriculture Producers ETF|
|4||TAGS||Teucrium Agricultural Fund|
|5||RJA||Elements Rogers International Commodity Index-Agriculture|
1. Invesco DB Agriculture Fund
The Invesco DB fund is a wide-ranging fund that speculates on the future performance of most agricultural commodities. It trades futures contracts on things like sugar, coffee, soybeans, wheat, and live cattle, which make up its top five holdings.
The fund was set up in 2007 and over the long term, its performance has been flat overall. However, it has returned much better results over the last few years, particularly in the aftermath of the pandemic when commodity prices have been on the rise across the board.
This ETF dwarfs most other agricultural funds in terms of the assets it holds, and breadth is certainly a feature to look out for. Something to note, however, is that it rebalances (updates) its holdings only once per year. Combined with the fact that it deals in futures contracts, it means there is the potential for it to be volatile and slow to adjust to any changes in the market.
2. Teucrium Corn Fund
This fund gives you the opportunity to speculate on corn prices, or use corn as a hedge against inflation. Its shares are valued based on an average of the price of a 3-month corn futures contract across a few different commodity exchanges.
The Teucrium Corn Fund is just one of a group of ETFs that track the price of different grains. There are also ones available for wheat, soybeans, and sugar, and they’re best used as a way to predict short term changes in the prices of each one. That’s opposed to as a long term, ‘set it and forget it’ fund, which is how investors usually treat ETFs.
3. Teucrium Agricultural Fund
This agricultural fund is the fifth Teucrium option that includes all four of the commodities listed above. That means it’s more diverse than either of the other funds which let you speculate on specific price changes, and it can be used in tandem with, or instead of, the Teucrium fund above.
As with any broad-stroke agricultural ETF, it’s a great option as a means to diversify your portfolio away from just owning stocks or a single type of asset. 25% of its assets are in each of the four commodities, and the price of the shares reflects an average of the 3-month future price of each one.
4. iShares MSCI Global Agriculture Producers ETF
This iShares fund is a little different to the three above it in this list because it owns stocks in companies instead of speculating on the price of commodities themselves. All those companies are in the business of agriculture, so it offers a more stable alternative to the short term volatility of commodity prices.
Its largest holding is John Deere, which manufactures heavy machinery that’s used by the agricultural industry and makes up 20% of the portfolio. A couple of other examples of the companies it owns are ones that produce fertiliser or trade commodities themselves.
Over the last few years the fund has returned a little over 10%, although again a lot of that has come since the pandemic. There’s no doubt that even if commodity prices fall away again then it still represents one of the most reliable ways to invest in the agriculture industry across the world.
5. Elements Rogers International Commodity Index – Agriculture
This fund offers another way to invest in a range of commodities, but in a slightly different way to the competition. The ETF tracks the 1-month future price of 21 commodities in total, weighted so that it is less exposed to popular ones like corn and soybeans.
Instead, it ups the weight of other commodities, specifically agricultural feed, cotton, and livestock, so that it stands out from the crowd. The fund has been running since 2007 and offers a great alternative to most agricultural ETFs that are heavily reliant on the performance of major grains.
Where to buy the best agriculture ETFs
To invest in an ETF, you need to sign up for an online broker. The table below includes the best ones and you can click through the links to get started now.
What is an agriculture ETF?
It’s an ETF that owns agricultural commodities, or stocks in companies that work in the agriculture industry. An ETF is an exchange-traded fund, which is a fund that trades on the stock market and owns a range of different assets.
Are agriculture ETFs a good investment?
They can be, although different commodities might be appealing for very different reasons. There are some, such as corn or other grains, which are popular as a hedge against inflation (because commodity prices tend to rise along with inflation).
In general, the biggest selling point of agricultural ETFs is that they’re much easier for a beginner to use than the actual commodities market. Tring to trade futures, or speculate on specific markets through CFDs, can be a daunting prospect. ETFs, meanwhile, take away all of the complexity and allow you to get exposure to a broad range of commodities with a few clicks.
There are some reasons to be careful with ETFs that deal with specific commodities, as unpredictable events like bad harvests or natural disasters can have an outsized effect on your investment. However, investing in one with a broad-brush approach might be the best way for the average person to get access to the agriculture market.
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Fact-checking & references
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