Investing in farmland has traditionally required a significant capital reserve. However, there are now options available that do not require high capital investments. Farmland ETFs and REITs are two such options that provide easy exposure to commodity futures. In this article, we will explore five different farmland agriculture ETFs that offer investors a chance to participate in this exciting market.
The Appeal of Farmland Investing
With the increasing interest in farmland investing, many people are curious about how to get started. While there are various ways to enter this market, most options demand a hefty capital reserve. These include buying farmland outright or participating in crowdfunding platforms with high minimum investments. However, there are alternative methods that do not require such substantial capital investments, although investors can choose to invest more if desired. Farmland ETFs and REITs are examples of these options.
Understanding Farmland ETFs
Farmland ETFs provide investors with exposure to agricultural commodities through futures contracts. It is essential to note that these investments are not recommended for beginners or intended for long-term investment strategies. They are derivative products with no tangible underlying assets, such as actual land or farms. Instead, investors are purchasing shares in a fund that buys futures contracts on agricultural commodities, thus gaining easier exposure to this market. These funds are primarily designed for short-term trading and are unsuitable for those seeking long-term investments.
1. Invesco DB Agriculture Fund (DBA)
The Invesco DB Agriculture Fund is the most extensive farmland ETF, with $915 million in assets under management. It offers investors exposure to a diverse mix of natural agricultural resources. However, it is important to note that this fund is designed for short-term exposure rather than long-term buy-and-hold strategies. It seeks to track the Diversified Agricultural Index Excess Return and also generates interest income from bond investments.
2. Teucrium Corn Fund (CORN)
For those looking to gain quick exposure to corn futures, the Teucrium Corn Fund is an ideal option. This fund closely tracks the daily prices of corn for future delivery. It remains invested in Benchmark Component Futures Contracts, cash, and equivalent investments under normal market conditions. With $106 million in total assets, this fund offers investors an opportunity to participate in the corn market.
3. Teucrium Wheat Fund (WEAT)
Similar to the Teucrium Corn Fund, the Teucrium Wheat Fund allows investors to gain exposure to wheat futures. With $169 million in total assets, this fund offers a compelling opportunity for those interested in the wheat market.
4. Teucrium Soybean Fund (SOYB)
Soybeans are one of the most common agricultural commodities today. The Teucrium Soybean Fund provides investors with exposure to soybean futures. Like other farmland ETFs, this fund is designed for short-term trades related to the price of soybeans. With $36 million in total assets, it offers a unique opportunity for investors interested in the soybean market.
5. Teucrium Agricultural Fund (TAGS)
For investors seeking a blend of exposure to different commodities, the Teucrium Agricultural Fund is an excellent choice. This fund provides short-term exposure to the combined daily performance of four separate Teucrium commodity pools: Corn, Soybean, Wheat, and Sugar. Additionally, it includes an investment in First American Government Obligs X. With $33 million in total assets, this fund offers diversification opportunities for investors.
Final Thoughts on Farmland Agriculture ETFs
There are multiple ways to add farmland or agriculture to your investment portfolio. While purchasing farmland outright or participating in crowdfunding platforms are options, farmland ETFs provide an alternative method. By investing in these ETFs, investors can gain exposure to agricultural commodities through futures contracts. However, it is crucial to remember that these investments are meant for short-term trades and are not suitable for beginners or long-term investment strategies. If you are interested in farmland investing, consider exploring the diverse options offered by the top farmland agriculture ETFs available.