Agriculture industry sources reported downward trends across agricultural commodities in 2017. While a number of challenges still remain in the sector, 2018 has been showing slightly better price performance. 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.

The following three agriculture exchange-traded-funds (ETFs) provide investment options for investors seeking exposure in 2018. However, with two of the three funds down year-to-date, investors will need to consider if now is a good entry point or if its better to keep the funds in mind should trends in the sector improve. Funds were selected based on strategy focus, sustainability amid the current turbulence, and assets under management, as of September 19, 2018. All data is as of September 19, 2018.

1. Invesco DB Agriculture (DBA)

  • Issuer: Invesco PowerShares
  • Avg. Volume: 583,712
  • Net Assets: $590.06 million
  • Yield: N/A
  • 2018 YTD Return: -9.06%
  • Expense Ratio: 0.91%
  • Inception Date: January 5, 2007
  • Price: $16.97

The Invesco DB Agriculture ETF is the top fund in the agriculture industry category by assets. The Fund has total assets under management of $590.06 million. Liquidity for this fund is also high with 583,712 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. One-year, three-year and five-year annualized total returns for the Fund are -8.48%, -6.51% and -7.42%.

2. iPath Bloomberg Grains Total Return ETN (JJG)

  • Issuer: iPath
  • Avg. Volume: 43,362
  • Net Assets: $78.42 million
  • Yield: N/A
  • 2018 YTD Return: 11.25%
  • Expense Ratio: 0.75%
  • Inception Date: October 23, 2007
  • Price: $27.07

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 and contains three futures contracts.

JJG is one of the largest funds in the agriculture category with $78.42 million in assets under management. In 2017 the Fund had a YTD return of -11.10%. One-year, three-year and five-year annualized total returns are -1.02%, -6.98% and -11.86%.

3. Elements Rogers International Commodity Index-Agriculture TR ETN (RJA)

  • Issuer: Swedish Export Credit
  • Avg. Volume: 67,448
  • Net Assets: $116.33 million
  • Yield: N/A
  • 2018 YTD Return: -6.17%
  • Expense Ratio: 0.75%
  • Inception Date: October 17, 2017
  • Price: $5.66

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, it holds front-month futures contracts, getting its investors close to the spot prices for the underlying commodities.

RJA is one of the largest agriculture funds, with $116.33 million in assets under management. 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.

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