Skyrocketing prices in commodities are starting to come back down to earth, but that doesn’t mean investors should still shy away from these alternative assets. They can still serve a purpose in a portfolio and still provide an inflation hedge should prices continue to push higher amid soaring inflation.
Rising inflation of course is starting to trigger recession fears. Aggressive tightening by the U.S. Federal Reserve appears to be pushing the economy to the brink of slipping into a recession, which is already causing pain in commodities.
“Commodities face a war on two fronts – demand destruction and king USD and this is causing some intense bear trends in commodities, and it wouldn’t be a stretch to think the systematic trend-following crowd would already be running hefty short positions in copper, silver, gold, U.S. gasoline and AG’s like wheat and soybeans,” said Pepperstone’s head of research Chris Weston, in a Kitco News article. “Commodities are the default expression of recession risk – crude and gold get the flow from clients but for those who like momentum and trend this is the space to pay attention to.”
Nonetheless, investors could see this recent pullback as an opportunity to get the commodities exposure they couldn’t get while prices were rising. While there are options such as futures and spot prices, there’s an easier way.
A Passive and an Active ETF Option
Getting exposure to commodities doesn’t mean investors have to hold various positions. They can have it all in the convenience of an exchange traded fund (ETF): the Teucrium Agricultural Fund (TAGS). The fund combines exposure to corn, wheat, soybean, and sugar through other Teucrium ETFs that focus specifically on these commodities, essentially offering investors a fund of funds.
Funds featured in TILL:
- The Teucrium Corn Fund (CORN)
- The Teucrium Wheat Fund (WEAT)
- The Teucrium Soybean Fund (SOYB)
- The Teucrium Sugar Fund (CANE)
Another fund to consider is the Teucrium Agricultural Strategy No K-1 ETF (TILL), which provides investors with long-only futures price exposure to corn, wheat, soybeans, and sugar. One difference with TILL is that it does not issue a K-1 tax form, but rather a 1099 form.
TILL will hold one futures contract in each of the four markets (corn, wheat, soybeans, and sugar) excluding the front-month (aka spot) contract. TILL is also an actively managed fund, giving investors more dynamic exposure to the markets compared to that of TAGS.
For more news, information, and strategy, visit the Commodities Channel.