Diversification is the bedrock of resilient investing, but are you truly covering all your bases? 

Today’s markets face inflation uncertainties, global trade tensions, and the potential for supply chain disruptions. These forces may reshape the investment landscape over the short- and long-term. In the face of these forces, agricultural ETFs may offer an innovative way to enhance a well-rounded portfolio. By integrating these funds into your strategies, you may be able to help defend your portfolios from market turbulence and also uncover growth opportunities in an essential global sector.

Agricultural ETFs are a forward-thinking solution to consider when seeking to enhance modern portfolios.

1. Why Diversification Still Matters

The Only "Free Lunch" of Investing?

Nobel laureate Harry Markowitz, the father of Modern Portfolio Theory, is often quoted as saying: "Diversification is the only free lunch in investing." By strategically combining non-correlated assets, investors may be able to reduce portfolio risk while enhancing expected returns.

The Mathematics Behind Diversification

Diversification's effectiveness lies in its mathematical foundation. When assets with low or negative correlations are combined, the overall portfolio volatility decreases. This occurs because the price movements of non-correlated assets offset each other, smoothing out fluctuations and delivering a more stable return profile.

"Diversification is the only free lunch in investing."

Harry Markowitz, Nobel Prize Winner

Agriculture: Low Correlation Diversifier

Agricultural commodities, easily accessed through ETFs, have historically demonstrated low correlations to major asset classes. As seen below, the Teucrium Agricultural Fund Benchmark Index, with approximately equal weights to corn, wheat, soybeans, and sugar, has shown a near-zero correlation to stocks and gold since its inception in 2012, and even a slightly negative correlation to bonds. The index has only a modest correlation to broader commodity markets.

Takeaway for Advisors and Investors

The statistics above demonstrate how agricultural commodities can serve as a non-correlated diversifier. Low-correlation assets can help enhance portfolio resilience and position you as an insightful and forward-thinking advisor or investor who applies sophisticated investment principles.

“The Teucrium Agricultural Index has a near zero correlation to stocks, bonds, and gold.”

The Strategic Role of Agriculture ETFs

Managing Risk and Capturing Growth

Agricultural ETFs can serve multiple potential roles in a portfolio:

• Hedge Against Inflation: Potentially protect purchasing power as rising prices impact traditional asset classes.

• Macro Risk Management: May offer stability and even growth during periods of geopolitical uncertainty, supply chain disruptions, and other global challenges.

• Growth Potential: Rising global populations and increased food demand create structural tailwinds for agricultural commodities 

• Non-correlation: Defensive characteristics during market downturns, helping to hedge equity and risk asset allocations.

The chart below illustrates how the Teucrium Agricultural Fund Index outperformed the S&P 500 in all 7 of the last stock market corrections of 10% or more. 

The average historical “stock market drawdown defense” of the Teucrium Agricultural Fund Index versus the S&P 500 is summarized below.

Takeaway for Advisors and Investors

If you seek to preserve and enhance wealth, consider agricultural ETFs as a potentially important addition to a diversified portfolio.

"The Teucrium Agricultural Benchmark Index outperformed the S&P 500 in 7 of the last 7 stock market corrections."

Understanding Agricultural ETFs

What Are Agricultural ETFs?

Agricultural ETFs provide focused exposure to essential global commodities like corn, wheat, soybeans, and sugar. Teucrium’s lineup includes:

• Diversified agricultural commodity ETFs designed for long-term diversification

• Single agricultural commodity ETFs for long-term investors or tactical trading

• Leveraged agricultural commodity ETFs for aggressive traders

These solutions enable advisors and investors to incorporate these markets into portfolios through traditional brokerage accounts.

By tracking commodity prices rather than holding physical assets, these ETFs simplify access to the agricultural sector while maintaining liquidity and transparency.

Takeaway for Advisors and Investors

Agricultural ETFs provide innovative tools to differentiate your portfolios.

Case Study – A Balanced Approach with TAGS or TILL

Practical Applications

Imagine a portfolio with diversified exposure to the leading agricultural commodities complementing equities, bonds, and other alternatives. Agricultural ETFs may provide a ballast against volatility and enhance returns in inflationary or supply-constrained environments.

Implementing Agricultural ETFs

The schematic below shows how agricultural ETFs can serve as part of a broader allocation to commodities or alternative investments. Advisors and investors may use different instruments and approaches for implementation:

• Diversified agricultural ETFs are designed for long-term allocation.

• Single-commodity ETFs are generally used for tactical or short-term allocation.

Allocating to Agricultural ETFs

Hypothetical Portfolio

For Illustration Only

Takeaway for Advisors and Investors

If you seek to preserve and enhance wealth, consider agricultural ETFs as a potentially important addition to a diversified portfolio.

Addressing Immediate Market Challenges

Why Now?

Today’s challenges demand timely action:

• Inflation is lower but persistent, eroding purchasing power. 

• Tariffs may inject volatility throughout capital markets as the world grapples with elevated global trade tensions. 

• Supply chain disruptions can erupt at any time impacting commodity prices.

Takeaway for Advisors and Investors

Agricultural ETFs may provide a tangible solution, helping to mitigate inflation and macro risks while adding value to portfolios.

Agricultural ETFS for Potential Diversification, Inflation Hedging, and Growth

Agricultural ETFs may offer diversification, inflation protection, and growth potential—essential for today’s advisors and investors. By including these funds in your portfolio, you may potentially help build and preserve generational wealth for your families or your clients.

Explore the Potential of Agricultural ETFs

Take the first step toward enhancing your portfolio strategies with Teucrium’s innovative ETFs. Whether you're looking to diversify, hedge against inflation, or capitalize on global macro trends, our team is here to guide you.

Schedule a consultation today to discover how agricultural ETFs can help empower you to build more resilient portfolios and provide new avenues to growth.

Important Disclosures and Risk

An investor should consider the Funds' investment objectives, risks, charges, and expenses carefully before investing. The prospectus and, if available, the summary prospectus contain this and other information about the Fund. You may obtain a prospectus and, if available, a summary prospectus by downloading the prospectus or calling 720-651-8092. Please read the prospectus or summary prospectus carefully before investing.

Important Disclosures and Risks

CXRN and WXET are recently organized investment companies with a limited operating history. As a result, prospective investors have a limited track record or history on which to base their investment decision.

CXRN and WXET carry distinct risks, using leverage that makes them riskier than similar funds without leverage. They may not be suitable for all investors and should only be considered by knowledgeable investors who understand the effects of compounding and daily leveraged (2x) investment returns. Designed for short-term trading, the Funds require active, frequent (even daily) management and are unsuitable for investors who do not actively monitor and manage their portfolio. Investors could lose the full principal value of their investment in a single day.

CORN, CANE, SOYB, WEAT, and TAGS are commodity pools regulated by the Commodity Futures Trading Commission (CFTC). These Funds, which are ETPs, are not mutual funds or any other type of Investment Company within the meaning of the Investment Company Act of 1940, as amended, and are not subject to regulation thereunder. The funds do not track the spot price of corn, sugar, soybeans or wheat.
Diversification does not ensure a profit or protect against loss.

Leverage Risk: CXRN and WXET seeks to achieve and maintain the exposure to the price of corn for future delivery by using leverage inherent in futures contracts. Therefore, the Fund is subject to leverage risk. Leverage may cause the Fund to be more volatile because it may exaggerate the effect of any increase or decrease in the value of the Fund’s portfolio securities. Futures trading involves a degree of leverage and as a result, a relatively small price movement in futures instruments may result in immediate and substantial losses to the Fund. The Fund may at times be required to liquidate portfolio positions, including when it is not advantageous to do so, in order to comply with guidance from the U.S. Securities and Exchange Commission (the “SEC”) regarding asset segregation requirements to cover certain leveraged positions.

Derivatives and Futures Risks: Because the Funds will invest primarily in commodity futures contracts and other derivative instruments based on the price of the underlying commodities, an investment in the Fund will subject the investor to the risks of that commodity market, and this could result in substantial fluctuations in the price of the Fund’s shares. Futures investing is highly speculative and involves a high degree of risk. An investor may lose all or substantially all of an investment in the Fund. Investing in commodity interests subjects the Fund to the risks of its related industry.

Non-Diversification Risk: CXRN and WXET are “non-diversified” investment companies under the Investment Company Act of 1940, as amended and, therefore, may invest a greater percentage of its assets in a particular security than a diversified fund.

An investment in the Fund involves risk, including possible loss of principal. For a complete description of the Fund’s principal investment risks, please refer to the prospectus.

PINE Distributors LLC is the distributor for the Teucrium ETFs. Teucrium Investment Advisors, LLC, wholly owned by Teucrium Trading, LLC, serves as the investment adviser of the Teucrium ETFs. PINE Distributors LLC is not affiliated with Teucrium Trading, LLC and Teucrium Investment Advisors, LLC. 

Teucrium Investment Advisors, LLC is an investment adviser in Burlington, Vermont and is a wholly owned limited liability company of Teucrium Trading, LLC. Teucrium Investment Advisors, LLC is registered with the Securities and Exchange Commission (SEC). Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. Teucrium Investment Advisors, LLC only transacts business in states in which it is properly registered or is excluded or exempted from registration.