Investors can harvest profit as prices rise.
Anyone who has set foot in a grocery store lately to stock up for a barbecue has likely noticed food prices are on the rise. While overall inflation has been subdued for a long period, rates are starting to pick up again and are running between 2 and 3 percent. Furthermore, talk of a trade war with China risks big price increases thanks to tariffs and other actions that may lift prices for American consumers. If you’ve noticed the trend of rising food prices and would prefer to profit instead of watching it eat into your wallet, then consider these seven agricultural exchange-traded funds for your portfolio.
VanEck Vectors Agribusiness ETF (ticker: MOO)
One of the largest and best-known plays on the big businesses behind the food we eat is the aptly-tickered MOO ETF. The holdings in this fund include farm equipment supplier Deere & Co. (DE) and fertilizer giant Nutrien (NTR). The fund is pretty focused, with only 59 total components and more than half of all assets allocated to the top 10 positions. However, it’s an A-list of the largest agribusiness companies and an easy way to invest in food.
iShares MSCI Global Agriculture Producers ETF (VEGI)
Another agribusiness fund with a clever ticker symbol is this iShares ETF that offers a slightly more diversified and global look at the industry. The fund has more than 140 stocks represented, including components in Europe, Japan and Australia. Big U.S. corporations are well-represented thanks to their size. But only a little more than 40 percent of the fund is domestic, with players like Japan’s Kubota and Italy’s CNH Industrial (CNHI) getting prominent spots in the top 10 holdings.
IQ Global Agribusiness Small Cap ETF (CROP)
If you don’t want a focus on big-food players and instead are looking for smaller companies, consider CROP. This is a global fund, with three of the top five components in Japan and other companies in the top 10 from Singapore, Canada and the Netherlands. You may not recognize many of the names, like $2 billion poultry producer Sanderson Farms (SAFM). However, for investors wanting to play shorter-term movement in food stocks from price inflation or consumer trends, these smaller companies are more sensitive to these events. These firms could see movement faster — and more dramatically — than the mega-caps in the foods sector.
First Trust Indxx Global Agriculture ETF (FTAG)
The First Trust agriculture ETF differs from the other picks so far in that it has a big bias toward agricultural chemicals companies. That includes BASF, Bayer and DowDupont (DWDP), which collectively represent almost 30 percent of the entire portfolio. That big bet has backfired in 2018, as some of these corporations have hit a snag in recent months. However, if this subsector finds its footing again, it could outperform other funds on this list.
Elements Rogers International Agriculture ETN (RJA)
What if you’d rather not worry about how corporations are managed and want to get a direct play on the food prices themselves? Then consider this Elements fund, benchmarked to an index of agricultural products watched by commodities investor Jim Rodgers. The index is weighted toward more actively traded and used commodities like corn, wheat and soybeans but includes orange juice, oats and milk futures, too. Just keep in mind that these are futures contracts tied to forward projections of prices — which may sometimes not line up perfectly with “spot” prices at the present time.
iPath Bloomberg Grains Subindex Total Return ETN (JJG)
There is a simpler way to invest in food than in complex futures contracts. The food sector is in many ways tied to three key grains — corn, wheat and soybeans. These products are used in a wide array of processed foods as well as feed for livestock and poultry. They are also key exports, as evidenced by the recent trade war with China resulting in retaliatory tariffs that target U.S. soy farmers. If you want to put your finger on the pulse of the U.S. agriculture business, then one strategy is to just zero in on these three key grains via the JJG exchange-traded note.
iPath Dow Jones-UBS Livestock Subindex Total Return ETN (COW)
Moving the other way is the COW ETF which, as can be expected by its name and ticker, is focused on meat products and ignores other elements of the agricultural commodity space. Right now, there are only two pieces to this index — futures on live cattle, and futures on “lean hogs.” Anyone who has spent time browsing the meats section at their local grocery store or read news stories about inflation knows that beef, in particular, is up sharply in price from just several years ago. COW is an ETN that lets you invest in this trend directly and cut out the other food elements.
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7 Food ETFs to Buy for Your Shopping List originally appeared on usnews.com
