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With the global population expected to reach 10 billion by 2050, demand for food will only continue to grow.
Agricultural exchange-traded funds (ETFs) offer investors an opportunity to capitalize on this rising demand while gaining access to new technologies that are changing the industry.
This article will look at the 10 best agricultural ETFs you should consider investing in for 2023.
Best Agricultural ETFs
- Invesco DB Agriculture Fund – Best agriculture ETF
- Teucrium Wheat Fund – Best wheat ETF
- VanEck Agribusiness ETF – Best agri-chemical ETF
- iShares MSCI Global Agriculture Producers ETF – Best farming ETF
- iPath Series B Bloomberg Grains Subindex Total Return ETN – Best grain ETF
- Teucrium Corn Fund – Best corn ETF
- iPath Bloomberg Coffee Subindex Total Return ETN – Best coffee ETF
- Teucrium Soybean Fund – Best soybean ETF
- Elements Agricultural Total Return – Best farmland ETF
- Teucrium Agricultural Fund – Best agricultural commodity ETF
In selecting the best agricultural ETFs for this article, we employed a rigorous process that considered various factors such as dividend ratio, stock portfolio, research coverage, and volatility.
Invesco DB Agriculture Fund (DBA)
The Invesco DB Agriculture Fund (DBA) is a global investment management company that provides investment solutions for individuals and institutions.
It has been in business since 1932 and has grown to be one of the largest asset managers in the world, with over $1 trillion in assets. The fund exposes investors to various markets, including grains, livestock, dairy products, coffee and sugar.
DBA has a dividend yield of 0.50%, higher than many other agriculture ETFs. We recommend the company for investors looking for an easy way to gain exposure to agricultural commodities without dealing with complex tax forms or trading strategies.
Teucrium Wheat Fund (WEAT)
The fund does not pay dividends but instead seeks capital appreciation through its investments in wheat futures contracts. We recommend investing in WEAT because it provides investors with an easy way to gain exposure to the price of wheat without having to directly purchase physical wheat or futures contracts themselves.
VanEck Agribusiness ETF (MOO)
The VanEck Agribusiness ETF (MOO) provides investors with one-trade access to the agribusiness industry. The fund has a dividend yield of 0.42%, which is lower than similar funds but still provides investors with some income potential from their investments in this sector.
We recommend investing in this ETF for several reasons: it provides broad diversification across different countries and regions, has a low expense ratio and offers exposure to some of the largest companies in this sector.
iShares MSCI Global Agriculture Producers ETF (VEGI)
The iShares MSCI Global Agriculture Producers ETF (VEGI) tracks investment results of an index made up of companies mainly engaged in agricultural production.
The dividend yield for this fund is currently 0.50%, which makes it one of the best farming ETFs today. We recommend investing in VEGI for its high dividend yield and diversified portfolio that provides exposure to global agriculture producers.
iPath Series B Bloomberg Grains Subindex Total Return ETN (JJG)
The iPath Series B Bloomberg Grains Subindex Total Return ETN (JJG) tracks the performance of a basket of grain futures contracts, including wheat, corn, soybeans, and sugar.
JJG does not pay dividends or distributions; however, it does provide investors with potential capital appreciation through its exposure to grain futures contracts.
We recommend JJG because it provides investors with access to multiple grain markets at once while also offering a low expense ratio compared to other similar products available today.
Teucrium Corn Fund (CORN)
The Teucrium Corn Fund (CORN) is an ETF that provides investors with an easy way to gain exposure to the price of corn futures in a brokerage account.
The fund invests in North America, Europe, and Asia corn futures markets. It also invests in other agricultural commodities such as wheat, soybeans and sugar. The dividend yield for CORN is currently 0%.
We recommend CORN as one of the best corn ETFs available today due to its low expense ratio and ability to provide investors with access to a wide range of markets.
Additionally, it has a strong track record of performance since its inception in 2011.
iPath Bloomberg Coffee Subindex Total Return ETN Fund (JO)
The iPath Bloomberg Coffee Subindex Total Return ETN Fund (JO) is an excellent option for investors looking to diversify their portfolios with a low-cost and liquid ETF.
The fund invests primarily in futures contracts on coffee traded on exchanges such as ICE Futures U.S., ICE Futures Europe or other international exchanges. It also invests in options on these futures contracts and cash-settled swaps based on the index.
We recommend this ETF because it exposes investors to a wide range of markets worldwide at a low cost and with high liquidity.
Teucrium Soybean Fund (SOYB)
The Teucrium Soybean Fund (SOYB) gives investors an easy way to gain exposure to soybeans futures in a brokerage account. It provides futures price exposure to wheat, corn, sugar, and soybean markets.
The fund invests in three soybean futures contracts with 35% exposure to each contract. In addition, it invests in corn, wheat, sugar and other related commodity markets.
SOYB does not pay dividends, but instead seeks capital appreciation through its investments in commodities futures contracts.
We recommend SOYB for investors looking for an easy way to gain exposure to the price of soybeans futures without having to buy physical soybeans or manage complex derivatives positions themselves.
Elements Agricultural Total Return (RJA)
Elements Agricultural Total Return (RJA) tracks the return of a specific underlying market measure. RJA focuses on investments in agricultural commodities such as corn, wheat and soybeans.
In addition, the company invests in investments and properties such as farmland ETFs, stocks, bonds, and mutual funds.
We recommend RJA because it offers investors a diversified portfolio of agricultural commodities that can provide exposure to different sectors and markets worldwide.
Teucrium Agricultural Fund (TAGS)
The Teucrium Agricultural Fund (TAGS) is a fund-of-funds that provides investors with an easy way to gain exposure to the price of wheat, corn, sugar, and soybeans futures. Launched in 2011, Teucrium Trading LLC manage the fund.
We recommend TAGS as one of the best agricultural commodity ETFs available today due to its low-cost structure, diversified portfolio of commodities and global market coverage.
5 Agriculture ETF Honorable Mentions
While the ETFs below haven’t made it into our top 10 list, they are still worth considering for those looking for exposure to the agriculture sector.
- iPath Bloomberg Livestock Subindex Total Return ETN: An exchange-traded note issued by Barclays Bank PLC, offering investors the potential to gain exposure to hogs and cattle while also earning a dividend rate.
- First Trust Indxx Global Agriculture ETF: An ETF that tracks a global, market-cap-weighted index of companies engaged in improving agricultural yields, offering investors a dividend ratio of 0.45% and potential for long-term growth.
- VanEck Future of Food ETF: An actively-managed ETF that seeks long-term capital appreciation by investing in companies engaged in agri-food technology and innovation, with a dividend ratio of 0.30% and growth potential.
- Vanguard Materials ETF: An ETF that seeks to track the performance of a benchmark index that measures the investment return of materials stocks, offering a dividend ratio of 1.42% and with the potential for long-term growth.
- First Trust Alternative Absolute Return Strategy ETF: An ETF that is actively managed and aims to give investors long-term total return through investments in commodity futures contracts.
What Are Agriculture ETFs?
Agriculture ETFs are financial instruments that invest in agricultural commodities, including grains, livestock, and farm supplies. These funds provide investors with a cost-effective way to gain exposure to agricultural markets they might not have direct access to.
- Farming: Farming ETFs invest in companies involved with farming, such as fertilizer manufacturers and agricultural equipment manufacturers.
- Wheat: Wheat ETFs invest in companies involved in producing and distributing wheat.
- Agri-chemical: Agri-chemical ETFs invest in companies involved in producing and distributing agrochemicals, such as fertilizers and pesticides.
- Grain: Grain ETFs invest in companies involved with the production and distribution of different grains, such as corn, wheat and oats.
- Corn: Corn ETFs invest in companies involved with the production and distribution of corn.
- Coffee: Coffee ETFs invest in companies involved in producing and distributing coffee.
- Soybean: Soybean ETFs invest in companies involved in producing and distributing soybeans.
- Vertical farming: Vertical farming ETFs invest in companies involved in developing and implementing controlled environment agriculture technologies.
Benefits of Agriculture ETFs
There are several advantages to investing in agriculture ETFs:
- Food demand: Food production and distribution are some of the most stable markets in the world. As the global population grows, so does the demand for food and agricultural products.
- Passive income: Many agricultural ETFs pay out dividends, providing investors with a steady passive income stream.
- Hedge against inflation: Agricultural ETFs are a great way to hedge against inflation since the price of agricultural goods is often tied to the overall inflation rate.
- Portfolio diversification: Agricultural ETFs can help to diversify your portfolio and reduce risk by providing exposure to a sector that is not as closely correlated with the stock market.
Drawbacks of Agriculture ETFs
Even with the many advantages of investing in agriculture ETFs, some associated drawbacks exist:
- Production: The performance of agricultural ETFs depends on agricultural goods’ production and distribution, as weather conditions, pests and other factors can have an effect on them.
- Market: Agricultural ETFs are subject to market risk, meaning their value can fluctuate in response to changes in the overall stock market.
- Financial: Agricultural ETFs may be subject to financial risk, meaning that changes in the financial industry, such as interest and currency exchange rates, can impact them.
- Regulatory risk: Agricultural ETFs may also be subject to regulatory risk, as governments can impose restrictions on the production and distribution of agricultural goods.
How to Buy Agriculture ETFs
The first step to investing in agriculture ETFs is to select a broker. Investors should research different brokerages and compare the fees, services and investment selection before choosing the one that meets their needs.
Once you’ve chosen a broker, you can select the ETFs you want to invest in. Investors must familiarize themselves with the fund’s objectives, expenses and fees, and the performance of the underlying securities before investing.
Finally, investors should monitor their investments and adjust as needed to ensure that their investments remain aligned with their goals.
Investing in agricultural ETFs can be a great way to diversify your portfolio and hedge against inflation. However, it’s essential to keep in mind that there are also risks associated with these investments, so always research the fund’s objectives, expenses and fees before investing.
Agriculture ETF FAQs
Let’s take a look at some commonly asked questions about agriculture ETFs.
Are agricultural ETFs a good investment?
Agricultural ETFs can be a good investment, depending on your personal goals and preferences. By taking into account the associated risks and potential rewards, you can make an informed decision about whether or not they are the right investment for you.
What is the difference between agriculture and farming ETFs?
Agriculture ETFs typically invest in a broad range of agricultural industry stocks and commodities, while farming ETFs primarily focus on companies producing agricultural goods.
What is the typical yield for agriculture ETFs?
Agriculture ETFs typically offer a yield of around 2.0%, with payouts that have grown almost 130% in 10 years, from 17.5 cents per share at the end of 2012 to 40 cents per share.