While the broader stock market has grown moderately in 2024, a surprising sector is leading the pack: agriculture.
Exchange-traded funds focused on agriculture are significantly outperforming — drawing investor attention and sparking questions about this niche market.
A key factor attracting investors to agriculture ETFs in 2024 is their potential hedge against inflation. Historically, agricultural commodities prices tend to rise during inflationary periods. This makes them an attractive asset class for investors seeking to protect their portfolios from inflation’s eroding effects.
The performance speaks for itself. As of April 16, the largest agriculture ETF, PowerShares DB Agriculture Fund (DBA), was up more than 21% in 2024. This handily beats the broader market, with the S&P 500 gaining just over 6% in the same period, as measured by the SPDR S&P 500 ETF Trust (SPY).
Contributing to the strong showing of agriculture ETFs, global food demand is growing and is expected to continue rising steadily due to population growth. The United Nations estimates a global population of nearly 10 billion by 2050, putting immense pressure on food production systems.
This translates to a long-term need for increased agricultural output, which benefits companies across the agricultural value chain.
