The capital markets are brimming with optimism heading into 2024. Still, volatility and market uncertainty warrant the use of alternative assets to balance a portfolio, such as agricultural commodities.
Two recent interest rate pauses by the Federal Reserve is paving the way for rate cuts in the new year. This gives the markets plenty of positivity to go around in all asset classes. Food Business News commented aptly that the current upside has been an “everything rally.”
“The week’s advances have been deemed an everything rally’ on the broad base of company shares rising, but some market analysts caution investors may be pricing in steeper interest rate cuts in 2024 than the Fed has forecast,” Food Business News said.
That said, however, 2024 is also a U.S. presidential election year, which should add heavy market fluctuations depending on the economic policies presented by the candidates. Complementing a portfolio with assets that are uncorrelated to the broad market can help ease the volatility. Agricultural commodities can accomplish that volatility hedge, but it begs the question: which commodities should an investor choose? One exchange-traded fund (ETF) can give investors practically all of them.
One Fund, All Ag Commodities
Rather than add various positions from different agricultural commodities, an easier way is to add exposure to the Teucrium Agricultural Fund (TAGS). The fund is essentially a fund of funds that features a low 0.13% expense ratio. This is beneficial in a time like now where investors are more cost-conscious.
“Agricultural commodities have a historically low correlation with U.S. equities making TAGS a potentially attractive option for portfolio diversification,” noted Teucrim on the TAGS product website.
It combines exposure to Teucrium exchange traded funds focused on corn, wheat, soybeans, and sugar. Traders or long-term investors can focus on TAGS for broad-based exposure or the individual funds for a more focused, concentrated approach in specific commodities.
The funds featured in TAGS:
- Teucrium Corn Fund (CORN)
- Teucrium Wheat Fund (WEAT)
- Teucrium Soybean Fund (SOYB)
- Teucrium Sugar Fund (CANE)
Agricultural commodities can provide a portfolio with the diversification it needs to help the navigate market uncertainty ahead of the new year. Furthermore, the potential for upside is apparent given the performance of the Teucrium Agricultural Fund Benchmark Index. The index is up almost 50% within the last five years. TAGS offers a perfect complement to a traditional 60-40 stock-bond portfolio with uncorrelated assets exposure, all in the convenience of one dynamic ETF.
For more news, information, and analysis, visit the Commodities Channel.