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- Farmland investing usually requires a hefty capital reserve, but some methods do not require high capital investments.
- Farmland ETFs and REITs are two options that do not require high capital investments.
- Five different farmland agriculture ETFs are available that provide easy exposure to commodity futures.
- These commodity ETFs are meant for short-term trade and are not recommended for beginners or long-term investments, as they are derivatives with no tangible underlying assets.
Top Farmland ETFs
With all of the interest surrounding farmland investing, you might wonder how you can get in on the action.
While there are several ways to get started, most options require a hefty capital reserve. This includes buying farmland outright with cash/financing or crowdfunding options with high minimum investments.
However, some methods do not require high capital investments, though you can invest more if desired.
These options are farmland ETFs and REITs.
This article will focus on five different farmland agriculture ETFs and explain what they are.
However, all of these investments are achieving exposure to agricultural commodities via futures contracts. As such, they are not recommended for beginners or meant for a long-term investment. Since this is a derivative product, there is no real underlying asset. You don't own any actual land, farms, etc.
You are investing in a fund that purchases futures contracts on agricultural commodities, giving you easier exposure. It is meant for short-term trade. Check out these REITs or farmland stocks if you want to own farmland.
The futures contract the fund purchases will be sold to someone who sells it to someone else. For example, you might use one of these ETFs if you believed the price of corn would skyrocket in a week. Then, rather than buying futures contracts, you could swing trade with the Teucrium Corn Fund, which owns corn futures.
Ok, let's dive right in and review these five farmland agriculture ETFs!
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1. Invesco DB Agriculture Fund (DBA)
This is the most extensive farmland ETF with $915 million in assets under management.
DBA allows you to gain exposure to agricultural commodities. The fund invests in a large mix of different natural agricultural resources.
However, the fund is designed for short-term exposure rather than a longer-term buy-and-hold investment.
This fund seeks to track the Diversified Agricultural Index Excess Return in addition to interest income from bond investments the fund makes with excess capital.
This fund aims to give investors easy exposure to commodity futures. However, since this fund invests in futures, it is unsuitable for all investors due to the risks associated with the derivatives market.
2. Teucrium Corn Fund (CORN)
For those looking to gain exposure to corn futures quickly, that is precisely what this fund was designed for.
CORN tracks the daily prices of corn for future delivery as closely as possible.
Under normal market conditions, the fund remains 100% invested in Benchmark Component Futures Contracts, cash, and equivalent investments.
This fund has a total of $106 Million in total assets.
Since this fund invests in futures, it is only suitable for some investors due to the risks associated with the derivatives market.
3. Teucrium Wheat Fund (WEAT)
This fund is almost identical to CORN, except wheat is the underlying commodity being tracked.
Like before, this exposure is accomplished via futures contracts, exposing investors to the risks associated with the derivatives market.
This fund has a total of $169 Million in total assets.
4. Teucrium Soybean Fund (SOYB)
Soybeans are one of the most common agricultural commodities today.
SOYB tracks an index of soybean futures contracts. It reflects the performance of soybeans. This ETF functions in the same manner as CORN and WEAT.
Since exposure is achieved via futures contracts, this is not meant to be a buy-and-hold investment. Instead, it is intended for short-term trades related to the price of soybeans.
This fund has a total of $36 Million in total assets.
5. Teucrium Agricultural Fund (TAGS)
If you want a blend of exposure to different commodities, this fund accomplishes that.
TAGS seeks to provide short-term exposure to the combined daily performance of these four separate Teucrium commodity pools:
- Corn Fund (25.35%)
- Soybean Fund (25.04%)
- Wheat Fund (24.91%)
- Sugar Fund (not highlighted in this article like the other Teucrium funds due to performance. 24.67%)
- First American Government Obligs X (0.03%)
Remember that the underlying funds are achieving this exposure via futures contracts.
This fund has a total of $33 Million in total assets.
Farmland Agriculture ETFs: Final Thoughts
There are many ways to add farmland or agriculture to your investment portfolio.
This includes purchasing a farm outright, participating in a crowdfunding platform, or buying ETFs and REITs.