Commodities are not just for short-term trading strategies
Owhat goes up must eventually come down, but when exactly? Of course, markets are hard to time, but when it comes to commodities, which have significantly outperformed major equity indices, it could be some time before their overall strength wanes.
Market experts are already seeing that commodity prices are starting to fall. This, however, does not necessarily mean that commodities will experience a broad sell-off similar to tech stocks in the first half of 2022.
“In the short term, the answer is no” said portfolio manager Lisa Thompson, “The market has overreacted and we are already seeing a slight drop in prices. But, compared to where they were a year ago, commodity prices are significantly higher — and I think that’s a lasting trend. “
“Over the long term,” Thompson added, “prices are likely to remain high due to a number of factors including rising demand, supply shortages and the forces of de-globalization symbolized by the war in Ukraine and the strained relations between the United States and China. Higher prices should be expected in a world where free and open trade is in decline.”
2 Ways to Get Exposure to Commodities
Getting exposure to commodities does not mean that investors have to hold various positions. They can have it all from the comfort of an exchange-traded fund (ETF): the Teucrium Agricultural Fund (TAGS). The fund combines exposure to corn, soybeans, and sugar through other Teucrium ETFs that focus specifically on these commodities, essentially offering investors a fund of funds.
Fund features in TILL:
- teucrium Corn Funds (CORN)
- teucrium Wheat Funds (WEAT)
- teucrium Soy Fund (SOYB)
- teucrium Sugar Funds (CANE)
On the other hand, another fund to consider is the Teucrium Farming Strategy Non K-1 ETF (TILL), which provides investors with long exposure only to corn, wheat, soybean and sugar futures prices. 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 first month contract (i.e. spot). TILL is also an actively managed fund, giving investors more dynamic market exposure than TAGS.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.