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Awesome Agriculture Commodities Lifting This ETF


It has been a banner year for agriculture and soft commodities. The proof is in the pudding as the iPath Dow Jones-UBS Coffee Total Return Sub-Index ETN (JO) and the iPath Pure Beta Coffee ETN (CAFE) rank as two the best non-leveraged exchange traded products year-to-date.

The iPath Dow Jones-UBS Softs Total Return Sub-Index ETN (NYESArca:JJS) has impressed as well, gaining more than 25% since the start of the year. [Soft Commodities Soar in February]

Indecisive commodities investors and those looking for exposure to multiple agriculture and soft commodities exposure under the umbrella of one ETF have benefited as well. That is if they have embraced funds such as the PowerShares DB Agriculture Fund (DBA) . [One-Stop Shop for Commodities Investors]

Flows data indicate investors have in fact been warming to DBA. Year-to-date, DBA has raked in $146.4 million in fresh assets, ranking as the sixth-best PowerShares ETF in terms of 2014 inflows, according to issuer data. Said another way, nearly 10% of DBA’s current assets under management total has come into the fund just this year.

DBA tracks the DBIQ Diversified Agriculture Index Excess Return, a rules-based index that tracks some of the most heavily traded agriculture commodities. DBA’s current composition includes almost a quarter of its weight to livestock, which as the iPath Pure Beta Livestock ETN (LSTK) has shown has been a fine place to be this year. [Livestock Prices Lift This ETN]

DBA also allocates a combined 40% of its weight to coffee, corn and cocoa. That is another advantage in a year in which the worst-performing exchange traded product tracking those commodities is the Teucrium Corn Fund (CORN) , which is still up almost 10%.

DBA represents something of a Lazarus play as some of its holdings are among the worst-performing commodities over the past three years, notes technical analyst Chris Kimble of Kimble Charting Solutions. Kimble points out that over the past three years, coffee, sugar, soybeans and corn are four the six worst-performing commodities.

That is over 51% of DBA’s weight right there, indicating buying low has worked with these commodities and DBA. It could be a sign that DBA has more upside in store.

PowerShares DB Agriculture Fund


ETF Trends editorial team contributed to this post.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.