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Agriculture, meals, and associated industries make up about 5% of the U.S. GDP, whereas America’s farms make up about 0.6%.
As such an necessary a part of the economic system, it’s simple to see why agriculture is such a preferred funding. And among the finest methods so as to add this important trade to your portfolio is with exchange-traded funds (ETFs).
On this article, we’re rounding up 5 of one of the best farmland and agriculture ETFs.
5 Farmland ETFs to Watch in 2022
Farmland ETF | Ticker | Holdings |
---|---|---|
Invesco DB Agriculture Fund | DBA | Diversified agriculture commodities futures, Treasury securities, cash market funds, and Treasury Invoice ETFs |
Teucrium Wheat Fund | WEAT | Wheat futures |
ELEMENTS Linked to the Rogers Worldwide Commodity Index – Agriculture Whole Return | RJA | Diversified agriculture commodities futures |
Teucrium Agricultural Fund | TAGS | Diversified agriculture commodities futures |
iPath Sequence B Bloomberg Agriculture Subindex Whole Return ETN | JJA | Diversified agriculture commodities futures |
(Word: All information concerning inventory costs and market capitalization is as of the shut of buying and selling on Wednesday, July 27, 2022.)
1. Invesco DB Agriculture Fund (DBA)
- Present Value: $19.80
- 12-Month Excessive: $23.01
- 12-Month Low: $18.32
- Web Property: $1.84 billion
The Invesco DB Agriculture Fund tracks modifications within the DBIQ Diversified Agriculture Index Extra Return, plus curiosity revenue from the fund’s holdings in Treasury securities, cash market funds, and Treasury Invoice ETFs. This fund provides buyers a solution to acquire publicity to commodities futures throughout the whole agricultural trade.
DBA is without doubt one of the hottest agriculture and farmland ETFs, because of its diversification. The ETF value has grown steadily over the previous 5 years, and whereas it’s down from its 12-month excessive, it’s buying and selling at the next value than it was one 12 months in the past.
2. Teucrium Wheat Fund (WEAT)
- Present Value: $8.22
- 12-Month Excessive: $12.75
- 12-Month Low: $6.64
- Web Property: $477.63 million
Many of the ETFs on our record have broad agriculture publicity, which means you may spend money on many components of the agriculture trade without delay. The Teucrium Wheat Fund is the one one on our record that invests in a single a part of the trade — wheat. This ETF invests in wheat futures, permitting buyers to generate income from one of the vital necessary agricultural merchandise.
The Teucrium Wheat Fund was created in 2011 and is without doubt one of the largest agriculture ETFs. The fund has remained pretty stage for the previous 5 years however has seen a lift over the previous 12 months.
3. ELEMENTS Linked to the Rogers Worldwide Commodity Index – Agriculture Whole Return (RJA)
- Present Value: $8.98
- 12-Month Excessive: $11.03
- 12-Month Low: $7.56
- Web Property: $153.05 million
This ETF tracks the efficiency of the Rogers Worldwide Commodity Index – Agriculture Whole Returns. This index comprises a basket of 21 agriculture commodity futures contracts. Due to the various various kinds of agriculture commodities included, buyers can acquire diversified publicity to the agriculture and farmland trade.
This ETF has seen main development within the 5 years because it was created. Moreover, the fund’s every day whole return over the previous 12 months is 14.16%.
4. Teucrium Agricultural Fund (TAGS)
- Present Value: $29.49
- 12-Month Excessive: $37.91
- 12-Month Low: $25.35
- Web Property: $47.41 million
The Teucrium Agricultural Fund is a broad agricultural fund that features publicity to corn, wheat, soybeans, and sugar futures, that are among the many most necessary agricultural merchandise within the U.S. This fund is certainly one of many agricultural funds that Teucrium provides, and the one one that provides a diversified portfolio of agricultural merchandise.
The Teucrium Agricultural Fund was created in 2012. The fund is definitely priced decrease at present than it was when it was created. After its creation, the fund went by a downward pattern that lasted a number of years. However the value has been growing over the previous 5 years, and the worth at present is significantly greater than it was only one 12 months in the past.
5. iPath Sequence B Bloomberg Agriculture Subindex Whole Return ETN (JJA)
- Present Value: $23.89
- 12-Month Excessive: $38.48
- 12-Month Low: $19.96
- Web Property: $11.21 million
The iPath Sequence B Bloomberg Agriculture Subindex Whole Return ETN gives publicity to the Bloomberg Agriculture Subindex Whole Return, which is made up of seven totally different futures contracts on agricultural commodities. The ETN is technically an unsecured debt obligation, which means it brings totally different dangers than investing immediately in commodities futures contracts.
This ETN was created in 2018. Within the 4 years because it was created, the fund’s value has really remained pretty stage. Whereas its efficiency over the previous month has been removed from stellar, it has a one-year return of 8.28%.
Different Methods to Put money into Farmland
Farmland — and agriculture normally — has lengthy been a preferred funding possibility, however it’s grow to be more and more simple for buyers to entry because of ETFs and different sorts of funds. Farmland has an extended historical past of optimistic returns, whether or not you’re investing immediately within the land itself or within the crops that develop on it.
Should you’re curious about investing within the agriculture trade, ETFs aren’t your solely possibility. Let’s speak about a couple of alternate options.
Farmland Crowdfunding
Crowdfunding platforms are getting used throughout all industries to assist buyers pool their cash collectively, however they’re significantly helpful relating to massive investments like actual property.
There are a number of crowdfunding platforms designed particularly for farmland. Examples embody AcreTrader, FarmTogether, and FarmFundr. Once you make investments by certainly one of these websites, you grow to be a partial proprietor of a bit of farmland and might revenue both from the sale of the land, the hire somebody pays to farm the land, or the crops themselves.
Some Farmland crowdfunding web sites are solely open to accredited buyers, which means you’ll want a web value of at the very least $1 million or an revenue of at the very least $200,000 (or $300,000 between you and a partner).
Be taught extra about actual property crowdfunding platforms.
Farmland REITs
One other solution to make investments not directly in farmland is thru actual property funding trusts (REITs). Once you purchase REITs, you’re shopping for shares of inventory in an organization that owns and manages actual property. In return, you can also make a return in your funding from the corporate’s earnings. A advantage of REITs is that they share a number of the enticing options of shares, together with their liquidity and the power to promote them in a while for a revenue.
Agriculture Mutual Funds
Mutual funds are just like exchange-traded funds (ETFs) in that many buyers pool their cash collectively to achieve publicity to a diversified choice of underlying property. Simply as there are ETFs dedicated to agriculture and farmland, there are many mutual funds that obtain the identical aim. Most frequently, these funds spend money on the crops that farmland creates relatively than the land itself.
Get began >> Finest Brokers for Mutual Funds for 2022
Agriculture Shares
A closing solution to make investments not directly in farmland is by buying agriculture shares. Identical to with ETFs and mutual funds, these shares don’t can help you spend money on farmland itself. As an alternative, they allow you to spend money on the businesses and merchandise within the agriculture trade.
Nonetheless, there are some downsides to purchasing agriculture shares. Once you purchase a share of inventory, you’re investing in a single firm. Relatively than benefiting from the whole agriculture trade — and even part of it — you’re primarily selecting winners and losers.
And even when the trade has an excellent 12 months, the corporate you’ve invested in won’t. Agriculture ETFs, alternatively, can help you acquire publicity to extra of the market.
The Backside Line: Ought to You Put money into Farmland?
The agriculture trade is without doubt one of the cornerstones of the U.S. economic system. And whereas most of us might not reside or work on farms, we will nonetheless profit from farming by our investments.
In keeping with AcreTrader, U.S. farmland has produced common returns of 12.24% over the previous 20 years. Should you purchased land for $10,000 in 2000, it will be value greater than $96,000 at present. Contemplating the common annual return of the U.S. inventory market is about 10%, it’s simple to see why farmland is such a beautiful funding.
Whereas farmland is a traditionally good funding, it’s troublesome to take a position immediately in. The excellent news is there are many different methods to not directly spend money on agriculture, together with agriculture shares, farmland ETFs, mutual funds, REITs, and farmland crowdsourcing. So you may put that shovel away.
Identical to the rest, it’s not clever to place your complete portfolio into farmland or agriculture. However allocating at the very least a portion of your portfolio to this trade can add diversification to your portfolio and assist mitigate your losses when different investments will not be performing as nicely.
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