Agriculture, food, and related industries make up about 5% of the U.S. GDP, while America’s farms make up about 0.6%.
As such an important part of the economy, it’s easy to see why agriculture is such a popular investment. And one of the best ways to add this vital industry to your portfolio is with exchange-traded funds (ETFs).
In this article, we’re rounding up five of the best farmland and agriculture ETFs.
5 Farmland ETFs to Watch in 2022
|Invesco DB Agriculture Fund||DBA||Diversified agriculture commodities futures, Treasury securities, money market funds, and Treasury Bill ETFs|
|Teucrium Wheat Fund||WEAT||Wheat futures|
|ELEMENTS Linked to the Rogers International Commodity Index - Agriculture Total Return||RJA||Diversified agriculture commodities futures|
|Teucrium Agricultural Fund||TAGS||Diversified agriculture commodities futures|
|iPath Series B Bloomberg Agriculture Subindex Total Return ETN||JJA||Diversified agriculture commodities futures|
(Note: All data regarding stock prices and market capitalization is as of the close of trading on Wednesday, July 27, 2022.)
1. Invesco DB Agriculture Fund (DBA)
- Current Price: $19.80
- 12-Month High: $23.01
- 12-Month Low: $18.32
- Net Assets: $1.84 billion
The Invesco DB Agriculture Fund tracks changes in the DBIQ Diversified Agriculture Index Excess Return, plus interest income from the fund’s holdings in Treasury securities, money market funds, and Treasury Bill ETFs. This fund offers investors a way to gain exposure to commodities futures across the entire agricultural industry.
DBA is one of the most popular agriculture and farmland ETFs, thanks to its diversification. The ETF price has grown steadily over the past five years, and while it’s down from its 12-month high, it is trading at a higher price than it was one year ago.
2. Teucrium Wheat Fund (WEAT)
- Current Price: $8.22
- 12-Month High: $12.75
- 12-Month Low: $6.64
- Net Assets: $477.63 million
Most of the ETFs on our list have broad agriculture exposure, meaning you can invest in many parts of the agriculture industry at once. The Teucrium Wheat Fund is the only one on our list that invests in a single part of the industry — wheat. This ETF invests in wheat futures, allowing investors to make money from one of the most important agricultural products.
The Teucrium Wheat Fund was created in 2011 and is one of the largest agriculture ETFs. The fund has remained fairly level for the past five years but has seen a boost over the past year.
3. ELEMENTS Linked to the Rogers International Commodity Index – Agriculture Total Return (RJA)
- Current Price: $8.98
- 12-Month High: $11.03
- 12-Month Low: $7.56
- Net Assets: $153.05 million
This ETF tracks the performance of the Rogers International Commodity Index – Agriculture Total Returns. This index contains a basket of 21 agriculture commodity futures contracts. Thanks to the many different types of agriculture commodities included, investors can gain diversified exposure to the agriculture and farmland industry.
This ETF has seen major growth in the five years since it was created. Additionally, the fund’s daily total return over the past year is 14.16%.
4. Teucrium Agricultural Fund (TAGS)
- Current Price: $29.49
- 12-Month High: $37.91
- 12-Month Low: $25.35
- Net Assets: $47.41 million
The Teucrium Agricultural Fund is a broad agricultural fund that includes exposure to corn, wheat, soybeans, and sugar futures, which are among the most important agricultural products in the U.S. This fund is one of many agricultural funds that Teucrium offers, and the only one that offers a diversified portfolio of agricultural products.
The Teucrium Agricultural Fund was created in 2012. The fund is actually priced lower today than it was when it was created. After its creation, the fund went through a downward trend that lasted several years. But the price has been increasing over the past five years, and the price today is considerably higher than it was just one year ago.
5. iPath Series B Bloomberg Agriculture Subindex Total Return ETN (JJA)
- Current Price: $23.89
- 12-Month High: $38.48
- 12-Month Low: $19.96
- Net Assets: $11.21 million
The iPath Series B Bloomberg Agriculture Subindex Total Return ETN provides exposure to the Bloomberg Agriculture Subindex Total Return, which is made up of seven different futures contracts on agricultural commodities. The ETN is technically an unsecured debt obligation, meaning it brings different risks than investing directly in commodities futures contracts.
This ETN was created in 2018. In the four years since it was created, the fund’s price has actually remained fairly level. While its performance over the past month has been far from stellar, it has a one-year return of 8.28%.
Other Ways to Invest in Farmland
Farmland — and agriculture in general — has long been a popular investment option, but it’s become increasingly easy for investors to access thanks to ETFs and other types of funds. Farmland has a long history of positive returns, whether you’re investing directly in the land itself or in the crops that grow on it.
If you’re interested in investing in the agriculture industry, ETFs aren’t your only option. Let’s talk about a few alternatives.
Crowdfunding platforms are being used across all industries to help investors pool their money together, but they’re particularly useful when it comes to large investments like real estate.
There are several crowdfunding platforms designed specifically for farmland. Examples include AcreTrader, FarmTogether, and FarmFundr. When you invest through one of these sites, you become a partial owner of a piece of farmland and can profit either from the sale of the land, the rent someone pays to farm the land, or the crops themselves.
Some Farmland crowdfunding websites are only open to accredited investors, meaning you’ll need a net worth of at least $1 million or an income of at least $200,000 (or $300,000 between you and a spouse).
Learn more about real estate crowdfunding platforms.
Another way to invest indirectly in farmland is through real estate investment trusts (REITs). When you buy REITs, you’re buying shares of stock in a company that owns and manages real estate. In return, you can make a return on your investment from the company’s profits. A benefit of REITs is that they share some of the attractive features of stocks, including their liquidity and the ability to sell them later on for a profit.
Agriculture Mutual Funds
Mutual funds are similar to exchange-traded funds (ETFs) in that many investors pool their money together to gain exposure to a diversified selection of underlying assets. Just as there are ETFs devoted to agriculture and farmland, there are plenty of mutual funds that achieve the same goal. Most often, these funds invest in the crops that farmland creates rather than the land itself.
Get started >> Best Brokers for Mutual Funds for 2022
A final way to invest indirectly in farmland is by purchasing agriculture stocks. Just like with ETFs and mutual funds, these stocks don’t allow you to invest in farmland itself. Instead, they let you invest in the companies and products in the agriculture industry.
However, there are some downsides to buying agriculture stocks. When you buy a share of stock, you’re investing in a single company. Rather than benefiting from the entire agriculture industry — or even a part of it — you’re essentially picking winners and losers.
And even if the industry has a good year, the company you’ve invested in might not. Agriculture ETFs, on the other hand, allow you to gain exposure to more of the market.
The Bottom Line: Should You Invest in Farmland?
The agriculture industry is one of the cornerstones of the U.S. economy. And while most of us may not live or work on farms, we can still benefit from farming through our investments.
According to AcreTrader, U.S. farmland has produced average returns of 12.24% over the past 20 years. If you bought land for $10,000 in 2000, it would be worth more than $96,000 today. Considering the average annual return of the U.S. stock market is about 10%, it’s easy to see why farmland is such an attractive investment.
While farmland is a historically good investment, it’s difficult to invest directly in. The good news is there are plenty of other ways to indirectly invest in agriculture, including agriculture stocks, farmland ETFs, mutual funds, REITs, and farmland crowdsourcing. So you can put that shovel away.
Just like anything else, it’s not wise to put your entire portfolio into farmland or agriculture. But allocating at least a portion of your portfolio to this industry can add diversification to your portfolio and help mitigate your losses when other investments may not be performing as well.
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