Summary: In this guide, we walk you through the basics of what farmland ETFs are, highlight some of the best options for 2024, and provide a step-by-step guide on how to invest in them through our broker of choice, eToro.
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What are farmland ETFs?
Farmland ETFs are investment funds that track the performance of the agricultural and commodities sector, specifically focusing on companies involved in farming, agribusiness, and related activities. These ETFs provide investors with exposure to the agriculture industry without having to directly own or manage physical farmland.
Investors are drawn to farmland ETFs for several reasons, including diversification, potential for capital appreciation, and a hedge against inflation. These funds typically hold a basket of stocks of companies engaged in various aspects of agriculture, such as crop production, equipment manufacturing, and agrochemicals.
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Best farmland ETFs for 2024
While researching for the top farmland ETFs for next year, we’ve found these two to be the overall best picks, worthy of your attention:
- Invesco DB Agriculture Fund (NYSE Arca: DBA);
- Teucrium Wheat Fund (NYSE Arca: WEAT).
Note
Highly Rated Stock Trading & Investing Platform
-
Invest in 2,800+ stocks and other assets including 70+ cryptocurrencies and commodities.
-
0% commission on buying stocks - buy in bulk or just a fraction from as little as $10. Other fees apply. For more information, visit etoro.com/trading/fees.
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Copy top-performing traders in real time, automatically.
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eToro USA is registered with FINRA for securities trading.
Invesco DB Agriculture Fund (DBA)
Invesco DB Agriculture Fund ETF strives to mirror the performance of the DBIQ Diversified Agriculture Index, offering exposure to a diverse portfolio of agricultural commodities. It includes key holdings such as futures contracts on corn, soybeans, sugar, and more. Investors frequently value its extensive exposure to various agricultural commodities.
Invesco DB Agriculture Fund price today
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Teucrium Wheat Fund (WEAT)
Teucrium Wheat Fund ETF is centered on wheat, and aims to monitor the daily price movements of wheat futures contracts. It offers focused exposure to the wheat market, catering to investors with a keen interest in this particular commodity. Those seeking to capitalize on trends within the wheat market may find this ETF appealing due to its performance.
Teucrium Wheat Fund price today
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How to invest in farmland ETFs: Step-by-step
If you’re looking to invest in farmland ETFs, consider our step-by-step guide right here:
Step 1: Choose a broker
The first step in investing in farmland ETFs is to choose a reputable brokerage platform. That said, our go-to broker is eToro, a widely popular brokerage platform that offers a host of farmland ETFs, as well as several solid investing features.
Highly Rated Stock Trading & Investing Platform
-
Invest in 2,800+ stocks and other assets including 70+ cryptocurrencies and commodities.
-
0% commission on buying stocks - buy in bulk or just a fraction from as little as $10. Other fees apply. For more information, visit etoro.com/trading/fees.
-
Copy top-performing traders in real time, automatically.
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eToro USA is registered with FINRA for securities trading.
Nevertheless, when choosing a broker, you should consider factors like:
- A user-friendly interface;
- Low transaction fees;
- Charting tools;
- Wide range of investment options.
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Step 2: Fund your account
After selecting a broker, you’ll need to fund your investment account. This can usually be done through bank transfers, wire transfers, or electronic funds transfer (EFT). Nevertheless, ensure that your account is adequately funded to cover your planned investment.
Step 3: Research farmland ETFs
Before making any investment decisions, it’s key to conduct thorough research on the available farmland ETFs. While doing so, consider factors such as the fund’s objectives, expense ratio, historical performance, and the specific commodities it focuses on. This research will help you make informed investment choices aligned with your financial goals.
Step 4: Place your trade
Once you’ve identified the farmland ETFs that align with your investment strategy, it’s time to place your trade. So, log in to your brokerage account, enter the relevant ticker symbols (e.g., DBA or WEAT), specify the number of shares you want to purchase, and choose the type of order (market or limit). Review your order before finalizing the trade.
Pros and cons of investing in farmland ETFs
Pros
- Diversification: Farmland ETFs provide diversification by exposing investors to various components of the agriculture sector;
- Inflation hedge: Agricultural investments, including farmland, have historically served as a hedge against inflation;
- Accessibility: Investing in farmland ETFs is more accessible than directly owning physical farmland, making it suitable for a broader range of investors.
Cons
- Market volatility: Agriculture markets can be volatile, influenced by factors such as weather conditions, geopolitical events, and commodity prices;
- Commodity risks: Farmland ETFs are subject to the risks associated with specific commodities, and poor crop yields or price fluctuations can impact returns;
- Limited control: Investors do not have direct control over the management of the underlying farmland, relying on the fund manager’s decisions.
Should you be interested in investing in ETF commodities, feel free to peruse our additional guides on this subject, including:
- How to Invest in Copper ETFs;
- How to Invest in Gold ETFs;
- How to Invest in Lithium ETFs;
- How to Invest in Silver ETFs;
- How to Invest in Wheat ETFs;
- How to Invest in Cobalt ETFs;
- How to Invest in Natural Gas ETFs.
Common mistakes to avoid when buying farmland ETFs
- Lack of research: Failing to conduct thorough research on the chosen farmland ETFs can lead to uninformed investment decisions;
- Ignoring costs: Overlooking expenses, such as management fees and transaction costs, can significantly impact overall returns;
- Market timing: Trying to time the market can be challenging and may lead to missed opportunities or losses;
- Neglecting diversification: Concentrating investments in a single farmland ETF without considering overall portfolio diversification can increase risk.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
FAQs about farmland ETFs
Are farmland ETFs a good long-term investment?
Farmland ETFs can be a good long-term investment for those seeking exposure to the agriculture sector. However, like any investment, it’s essential to carefully consider your financial goals, and risk tolerance, and conduct thorough research before making decisions.
How to invest in farmland ETFs?
To invest in farmland ETFs, follow a step-by-step process by choosing a broker, funding your account, researching farmland ETFs, and placing your trade.
What are the best farmland ETFs for 2024?
The best farmland ETFs for 2024 include the Invesco DB Agriculture Fund (NYSE Arca: DBA) and the Teucrium Wheat Fund (NYSE Arca: WEAT).
Can I invest in farmland ETFs through a retirement account?
Yes, many brokerage platforms allow investors to purchase farmland ETFs through individual retirement accounts (IRAs) and other retirement accounts.
How often should I review my farmland ETF investments?
You should regularly review your farmland ETF investments, at least on an annual basis. Assess the fund’s performance, check for any changes in strategy or management, and ensure that it aligns with your investment objectives.
