5 ETFs to Hedge ‘Agflation’

27-Nov-2010

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An eternal optimist, Liu-Yue built two social enterprises to help make the world a better place. Liu-Yue co-founded Oxstones Investment Club a searchable content platform and business tools for knowledge sharing and financial education. Oxstones.com also provides investors with direct access to U.S. commercial real estate opportunities and other alternative investments. In addition, Liu-Yue also co-founded Cute Brands a cause-oriented character brand management and brand licensing company that creates social awareness on global issues and societal challenges through character creations. Prior to his entrepreneurial endeavors, Liu-Yue worked as an Executive Associate at M&T Bank in the Structured Real Estate Finance Group where he worked with senior management on multiple bank-wide risk management projects. He also had a dual role as a commercial banker advising UHNWIs and family offices on investments, credit, and banking needs while focused on residential CRE, infrastructure development, and affordable housing projects. Prior to M&T, he held a number of positions in Latin American equities and bonds investment groups at SBC Warburg Dillon Read (Swiss Bank), OFFITBANK (the wealth management division of Wachovia Bank), and in small cap equities at Steinberg Priest Capital Management (family office). Liu-Yue has an MBA specializing in investment management and strategy from Georgetown University and a Bachelor of Science in Finance and Marketing from Stern School of Business at NYU. He also completed graduate studies in international management at the University of Oxford, Trinity College.

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By Tom Lydon, ETF Trends,

Inflation might not be a near-term prospect right now, but agflation certainly might be. Here’s how to position yourself with exchange traded funds (ETFs).

If you believe the forecasts, food is about to get more expensive:

* The rising middle class around the globe is creating rising demand for agriculture products and taking commodities to new highs. Often with an improved income comes greater demand for a protein-rich diet, which requires more corn that’s used to feed livestock.
* On top of that, clean energy laws and interest has led to an increased use of biofuels such as ethanol as a source of energy.
* According to NewsMax on The Daily Crux, the demand for non-staple foods such as dairy and meat are also inflating the international food bill. [Getting Agriculture Exposure With ETFs.]
* According to MoneyNews, the outlook for the global food-import bill this year was raised from $921 billion in June. The “sharp” rise in grain, sugar and oilseed prices in recent months is a cause of concern for prices next year, as one study by the United Nations’ Food and Agricultural Organization. [5 Ag ETFs Dominating the Markets.]

While you might feel pain in your pocketbook as prices rise, you can turn lemons into lemonade and benefit from rising prices by using ETFs, too. The more effective hedges may be ETFs that hold futures contracts, since they more closely reflect current prices. However, if you’re looking to dodge issues of contango and tax considerations that come with futures ETFs, consider an equity ETF that gives exposure to commodity producers.

* Teucrium Corn (NYSEArca: CORN): Holds corn futures
* iPath DJ-UBS Grains TR Sub-Idx ETN (NYSEArca: JJG): Tracks grain futures
* PowerShares DB Agriculture (NYSEArca: DBA): Holds a broad basket of futures that can include sugar, wheat, soybeans, cocoa and more
* Market Vectors Agribusiness (NYSEArca: MOO): Tracks a basket of agriculture producers
* PowerShares Global Agriculture Portfolio (NYSEArca: PAGG): Tracks a basket of agriculture producers

Tisha Guerrero contributed to this article.

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