Investors who are thinking about ways to diversify a traditional portfolio mix better should consider commodities like grains and related exchange traded funds to help provide uncorrelated returns.
“They correlate probably the least among the commodities with the S&P 500. So if someone is looking for a diversifier, grains should really be at the very top of their list,” Sal Gilbertie, CEO, Teucrium, said at the Inside ETFs conference.
Gilbertie also pointed out that in 11 of the 12 past periods when the S&P 500 experienced declines of 10% or more, grains have outperformed the equity benchmark.
As a way to tap into the agricultural commodities, Teucrium offers a suite of ETFs including the Teucrium Corn Fund (CORN), Teucrium Wheat Fund (NYSEArca: WEAT), Teucrium Soybean Fund (NYSEArca: SOYB), Teucrium Sugar Fund (NYSEArca: CANE) and the broader Teucrium Agricultural Fund (NYSEArca: TAGS).
CORN tracks three futures contracts for corn that are traded on the Chicago Board of Trade, including 35% second to expire contracts, 30% third to expire contracts, and 35% December following the third to expire. The various contract exposures help the fund limit the negative effects of rolling contracts, especially during a market in contango.
WEAT also tracks three futures contracts for wheat traded on the CBOT, including 35% second to expire contracts, 30% third to expire contracts, and 35% December following the third to expire.
SOYB tracks three futures contracts for soybeans on the CBOT, including 35% second to expire excluding August and September; 30% third to expire excluding August and September; and 35% expiring in the November following the expiration of the third-to-expire contract.
Similarly, CANE includes three futures contracts on No. 11 sugar traded on the Intercontinental Exchange, including 35% second to expire, 30% second to expire, 30% third to expire, and 35% expiring int he March following the expiration of the third-to-expire contract.
Lastly, TAGS is seen as a catch-all, fund-of-funds ETF that includes exposure to CORN, WEAT, SOYB, and CANE.
Watch Sal Gilbertie Discuss How To Diversify A Traditional Portfolio:
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