Agriculture industry sources reported upward trends across agricultural commodities in 2019. While a number of challenges still remain in the sector, 2020 could show even better price performance. Overall, supply and demand for agricultural commodities will continue to be the leading factors for price changes, requiring investors to steadily watch subsets of the market for emerging trends.
The three agriculture exchange traded funds (ETFs) below provide investment options for investors seeking exposure in 2020. However, all three funds saw negative returns last year, meaning investors will need to consider if now is a good entry point or if it's better to keep the funds in mind should trends in the sector show marked improvement. Funds were selected based on strategy focus, sustainability amid the current turbulence, and assets under management (AUM). All data is as of Jan. 10, 2020.
- The agricultural space could see continued momentum in 2020 thanks to increased demand for related commodities.
- None of the top three ETFs related to agriculture pay a dividend.
- The Invesco DB Agriculture ETF is one of the largest ETFs in the space, although its returns for the last several years have been negative.
- Of the three, the Elements Rogers ETN has had the best recent performance.
1. The Invesco DB Agriculture (DBA)
- Issuer: Invesco
- Avg. volume: 279,000
- Net assets: $352 million
- Yield: n/a
- One-year return: -4.1%
- Expense ratio: 0.89%
- Inception date: Jan. 5, 2007
- Price: $16.47
The Invesco DB Agriculture ETF is the top fund in the agriculture industry category by assets. The fund has total assets under management of $352 million. Liquidity for this fund is also high with 279,00 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.
DBA was launched in January 2007 and has one-, three-, and five-year annualized total returns of -4.1%, -6.3% and -7.55%.
2. The iPath Bloomberg Grains Total Return ETN (JJG)
- Issuer: iPath
- Avg. volume: 1,883
- Net assets: $18.9 million
- Yield: n/a
- One-year return: -4.7%
- Expense ratio: 0.45%
- Inception date: Oct. 23, 2007
- Price: $46.12
This fund, though technically an exchange-traded note, 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 and contains three futures contracts. JJG was one of the largest funds in the agriculture category but AUM has since declined.
3. The Elements Rogers International Commodity Index-Agriculture TR ETN (RJA)
- Issuer: Swedish Export Credit
- Avg. volume: 32,855
- Net assets: $74 million
- Yield: n/a
- One-year return: -3.2%
- Expense ratio: 0.75%
- Inception date: Oct. 17, 2017
- Price: $5.59
This fund follows a consumption-based index of agricultural commodities picked by the RICI committee. It cuts down its benchmark's weightings to focus on just corn and soybeans and then expands that to include agricultural feedstocks and livestock.
As with its benchmark, the fund holds front-month futures contracts, getting its investors close to the spot prices for the underlying commodities. As a relatively new fund, RJA doesn't yet have multi-year annualized total returns.
The Bottom Line
Agriculture 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.