Agriculture industry sources reported downward trends across agricultural commodities in 2017. While a number of challenges still remain in the sector, analysts believe 2018 will see slightly better price performance. In October the World Bank’s October commodities outlook projected agriculture prices would see a gain of approximately 1.2%. Meanwhile, JPMorgan analysts suggest betting on grains and sugar, where demand is expected to increase in 2018. Overall, supply and demand for agriculture commodities will continue to be the leading factors for price changes, requiring investors to steadily watch subsets of the market for emerging trends. (See also: A Primer for Investing in Agriculture.)

The following four agriculture exchange-traded-funds (ETFs) provide investment options for investors seeking exposure in 2018. With both short and long investment funds, investors have multiple options taking both bearish and bullish views. Funds were selected based on strategy focus, performance and assets under management as of February 14, 2018. All data is as of February 14, 2018.

1. DB Agriculture Double Short ETN (AGA)

  • Issuer: Deutsche Asset Management
  • Avg. Volume: 82
  • Net Assets: $0.57 million
  • Yield: N/A
  • 2018 YTD Return: 18.3%
  • Expense Ratio: 0.75%
  • Inception Date: April 16, 2008
  • Price: $31.82

With falling prices throughout 2017, the agriculture industry provides an opportunity for investors to take short positions to potentially benefit from additional decreases in prices. The DB Agriculture Double Short ETN takes a short position in agriculture commodities and adds leverage to enhance returns. The Fund seeks to match the return of the Deutsche Bank Liquid Commodity Index-Optimum Yield Agriculture (-200%) Index. AGA roes over 7% in 2017 and is up more than 18% year-to-date in 2018. Three-year and five-year annualized total returns for the fund are 6.04% and 19.05%. (See also: DAG vs. AGA: Comparing Leveraged Agriculture ETFs.)

2. DB Agriculture Short ETN (ADZ)

  • Issuer: Deutsche Asset Management
  • Avg. Volume: 100
  • Net Assets: $0.4 million
  • Yield: N/A
  • 2018 YTD Return: -1.67%
  • Expense Ratio: 0.75%
  • Inception Date: April 16, 2008
  • Price: $34.80

The DB Agriculture ETN is another product issued by Deutsche Asset Management that allows investors to seek gains from decreasing agriculture prices. This ETN uses leverage to achieve its objective. It has a similar strategy to AGA, however its leveraged position is less steep, only taking a one times short position. The Fund seeks to match the return of the Deutsche Bank Liquid Commodity Index-Optimum Yield Agriculture (-100%) Index. ADZ performed well in 2017 with a YTD return of 11.40%.

3. PowerShares DB Agriculture ETF (DBA)

  • Issuer: Invesco PowerShares
  • Avg. Volume: 755,890
  • Net Assets: $663.36 million
  • Yield: N/A
  • 2018 YTD Return: 1.39%
  • Expense Ratio: 0.85%
  • Inception Date: January 5, 2007
  • Price: $19.01

The PowerShares DB Agriculture ETF is the top fund in the agriculture industry category by assets. The Fund has total assets under management of $663.36 million. Liquidity for this fund is also high with 755,890 shares traded on average per day. DBA seeks to replicate the holdings and returns of the DBIQ Diversified Agriculture Index Excess Return. This index includes futures contracts on the most liquid and widely traded agricultural commodities.

In 2017, DBA had a YTD return of -7.70%. DBA was launched in January 2007. Three-year, five-year and ten-year annualized total returns for the Fund are -6.64%, -7.57% and -6.34%.

4. iPath Bloomberg Grains Total Return ETN (JJG)

  • Issuer: iPath
  • Avg. Volume: 52.741
  • Net Assets: $83.32 million
  • Yield: N/A
  • 2018 YTD Return: 5.42%
  • Expense Ratio: 0.75%
  • Inception Date: October 23, 2007
  • Price: $26.03

This fund offers targeted exposure to grain commodities. It seeks to track the holdings and performance of the Dow Jones-UBS Grains Subindex Total Return Service Mark. This index is based on futures contracts in grains. The Index contains three futures contracts.

JJG is one of the largest funds in the agriculture category with $77.5 million in assets under management. In 2017 the Fund had a YTD return of -11.10%. Three-year, five-year and ten-year annualized total returns are -9.87%, -14.17% and -8.34%.

The Bottom Line

Commodities are a risky investment. Everything from the weather to political upheaval can affect how commodities perform. Your investment in any of these ETFs should be accompanied by a commitment to continued due diligence on the ETFs and monitoring of commodities prices on a regular basis.

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