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With all of the interest surrounding farmland investing these days, you might be wondering how you too can get in on the action.
One of the most logical places to start is by looking for an exchange traded fund to invest in.
In this article, we will be covering 5 different agricultural/farmland funds and explaining 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 and are not 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.
What you are investing in is a fund that purchases futures contracts on agricultural commodities, giving you easier exposure. It is meant for a short term trade. If you are looking to own actual farmland, check out these farmland REITs.
The futures contract purchased by the fund will be sold to someone else who sells it to someone else and so on. A situation where you might use one of these ETFs is if you believed the price of corn was going to skyrocket in a week. Rather than buying futures contracts yourself, you could swing trade the Teucrium Corn Fund which owns corn futures.
Nonetheless, here is the list!
1. Invesco DB Agriculture Fund (DBA)
This is by far the largest farmland ETF with almost $1 Billion 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 more so for short term exposure and not 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.
The goal of this fund is to give investors easy exposure to commodity futures. Since this fund invests in futures, it is not suitable 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 in an easy manner, that is exactly what this fund was designed for.
CORN tracks as closely as possible the daily changes in the price of corn for future delivery.
Under normal market conditions, the fund remains 100% invested in Benchmark Component Futures Contracts as well as cash and equivalent investments.
This fund has a total of $129 Million in total assets.
Since this fund invests in futures, it is not suitable for all investors due to the risks associated with the derivatives market.
3. Teucrium Wheat Fund (WEAT)
This fund is almost identical in nature to CORN, with the exception being that the underlying commodity being tracked is wheat.
Just 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 $73 Million in total assets.
4. Teucrium Soybean Fund (SOYB)
Soybeans are one of the most widely used agricultural commodities today.
Since exposure is achieved via futures contract, this is not meant to be a buy and hold investment. Instead, it is meant for short term trades related to the price of soybeans.
This fund has a total of $47 Million in total assets.
5. Teucrium Agricultural Fund (TAGS)
If you want a blend of exposure to different commodities, this fund accomplishes exactly that.
TAGS seeks to provide short term exposure to the combined daily performance of these four separate Teucrium commodity pools:
- Corn Fund
- Soybean Fund
- Wheat Fund
- Sugar Fund
Keep in mind, the underlying funds are achieving this exposure via futures contracts.
This fund has a total of $8 Million in total assets.
How To Buy An ETF
Within a couple of minutes, you can purchase a farmland ETF for under $100!
To buy any farmland ETF, you'll need a trading app that supports buying and selling of ETFs.
Another plus is using a commission free brokerage that is also user friendly. You can purchase any of the ETFs listed above on Robinhood commission free. You can even buy fractional shares.
Plus, Farmland Riches readers can get free stocks when they sign up!
There are many ways to add farmland or agriculture to your investment portfolio.
While these ETFs are suitable for advanced traders looking to capitalize on short term price movements in commodities, they are not ideal for long term investment or for beginners.