Introduction
There are a few factors to consider when investing in the best farmland ETFs. The first is whether you want exposure to a particular region or country. For example, the United States farmland ETF (US Farm) offers exposure to all 50 states. Alternatively, you can invest in an all-world ETF.
The second consideration is the type of farmland you are interested in. For example, EWG farmland ETF invests in crops, livestock, forestry, and fisheries. The farmland in these categories varies in quality, so you will need to decide which type of farmland is most important to you.
The final consideration is the fees associated with the farmland ETF. Some farmland ETFs have low fees, while others have higher fees. You will need to decide which fee structure is best for you.
Farmland ETFs offer diversified exposure to agriculture commodities such as corn, wheat, soybean, cotton, sugar, and others. This article covers the best farmland ETFs in the world:
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The best farmland ETFs in the world:
1. Invesco DB Agriculture Fund (DBA)
Invesco DB Agriculture Fund DBA provides exposure to agricultural commodities such as corn, soybeans, wheat, cotton, sugar, coffee, cocoa beans, orange juice, dairy products, beef, pork, poultry, eggs, and milk. The fund invests primarily in futures contracts, options, and swaps. It uses derivatives to gain exposure to commodity prices while limiting risk.
The fund seeks to achieve its investment objective by investing primarily in the futures markets for agricultural commodities. It focuses on trading strategies that seek to profit from changes in price movements based on supply and demand factors.
This Fund isn’t appropriate for all investors because of the speculative nature of associate investment in futures contracts is volatile, such frequency in the movement in market prices of the underlying futures contracts could cause large losses.
2. Teucrium Corn Fund (CORN)
Teucrium Corn Fund (NYSE: Corn) is a managed futures fund that tracks the price of Corn for delivery in the future. Investors have an easy way to get exposure to the price of corn futures in their brokerage accounts thanks to the Teucrium Corn Fund (CORN).
Commodities can improve portfolio diversity since they frequently behave differently from other asset classes. Returns on specific commodities can be influenced by a variety of diverse factors.
Similar to other asset classes, you can divide your exposure to commodities into other groups, such as energy, precious metals, agriculture, industrial metals, etc.
One essential element of your entire exposure to agriculture may be CORN. This fund is 100% invested in Benchmark Components Futures Contracts, cash equivalents, and investments.
The fund seeks to provide investors exposure to the price movement of corn without the risks associated with the commodity itself.
3. Teucrium Wheat Fund (WEAT)
Teucrium Wheat Fund is one of the newest funds to hit the market. Launched in November 2018, it focuses on companies involved in agriculture and agribusiness. In particular, the fund invests in agricultural commodities such as grains, oilseeds, sugar, and livestock.
The fund is structured like a traditional mutual fund, with shares being offered on both public and private markets. Investors can buy into the fund either directly or indirectly via exchange-traded funds (ETFs).
Investors looking to put money into Teucrium Wheat Fund can choose between three different investment strategies: long/short equity, growth, and income. Each strategy offers investors different levels of risk and returns potential.
Long/Short Equity Strategy
This strategy involves buying stocks with high price-to-earnings ratios and selling those with low P/E ratios. By doing this, you attempt to profit from stock price swings without taking on too much risk.
Growth Strategy
This strategy aims to grow the value of the portfolio over time. It seeks out companies whose earnings and revenue are growing faster than inflation.
Income Strategy
This strategy generates steady returns while minimizing volatility. It looks for companies with strong cash flow and stable dividends.
4. Teucrium Soybean Fund (SOYB)
The Teucrium Soybean Investment Trust (NYSEAMEX: SOYB) is an exchange-traded fund that tracks the price movement of soybeans futures contracts on the Chicago Mercantile Exchange.
The fund seeks investment results that correspond generally to the price movements of the underlying commodities it follows.
5. Teucrium Agricultural Fund (TAGS)
The Teucrium Agricultural Fund is a fund of the European Investment Bank. It was established in 1992 to finance agricultural investments in Central and Eastern Europe, including Ukraine. The fund has been active since 1993. In 2015 it had assets worth €1.6 billion.
TAGS is an exchange-traded futures fund that combines four different agricultural commodities into one. The ETF includes shares of the following companies:
- Agro Development Corp.
- American Farmland Trust
- Smithfield Foods Inc.
- Tyson Foods Inc.
- United States Sugar Corporation
The average annualized return since inception is 12.9%. Shares trade under the symbol TGRF on the New York Stock Exchange.
Farmland Agriculture ETFs: Final Thoughts
The agriculture sector has been one of the best-performing sectors since the beginning of 2018. However, there are some drawbacks to investing in an exchange-traded fund (ETF). One major drawback is liquidity. An investor cannot sell shares of an ETF unless the market closes.
This makes it difficult to exit positions quickly without incurring large transaction costs. In addition, many farmers do not use futures contracts to hedge against risk because they prefer to manage risks themselves.
Lastly, while farmland prices have risen over the past few years, land values remain relatively low compared to other asset classes. As a result, the potential downside to owning farmland is substantial.
How Else To Invest in Farmland
Farmland investments come in different forms. Some people prefer to purchase the land outright. Others choose to invest in a farm loan. And still, others go one step further and become shareholders in agricultural companies.
Exchange-traded funds (ETFs), such as those offered by ETF Securities, offer investors exposure to agriculture without having to worry about how much cash they put up front. An investor could use an ETF to gain access to farmland without having to make a down payment.
A farm loan allows you to borrow money against the value of your property. This gives you the opportunity to build equity over time while reducing risk. If you decide to take out a loan, it’s important to shop around for the best terms.
Farmland Crowdfunding
A lot of people are investing money in farmland via crowdfunding platforms like Fundrise and Farmigo. These platforms let accredited investors buy into properties without having brokers involved. They’re called “crowdfunded real estate,” and there’s a lot of interest right now.
Farmland REITs
Farmland REITs are a relatively recent innovation in the real estate investment space. They allow individuals and institutions to gain exposure to farmland without actually owning the property themselves. Instead, REITs provide a vehicle for investors to purchase shares in companies that manage farmland. These companies are called REITs – Real Estate Investment Trusts.