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Which is the Right Sugar ETF For You?


Sugar is a consumable exported throughout the world. Although consumer trends shift from health-conscious alternatives and back, the market has remained consistent as manufacturers use the product in commercial production of food and beverage products. Instead of direct investing in this agricultural commodity, a good alternative and indirect investment in sugar through exchange-traded futures of companies involved in some aspect of the sugar industry provides a less risky investment strategy. Which sugar ETF is the right choice for you? That depends on your current portfolio and the type of diversification that you wish to add to the existing collection.

How to pick the right Sugar EFT

According to Investopedia, Since the first SPDRs were established in 1993, EFTs tracking of indexes have surged in popularity with investors. With so many available, choosing may seem difficult. The first step is to compare recommendations that fit in your investing style and preferences for benchmarking indices. Consider the holdings of the fund, the total value of assets, and previous performance in your analysis. If the goal is to find a profitable ETF for inclusion in your portfolio, if you are looking for a low-cost strategy for building the optimal portfolio and if you value efficiency, you're in the right place. We've consulted the most respected sources to identify the best sugar ETFs for 2020. They'll give you a few options for discussion with your financial advisor to pick the right sugar ETF for your financial investment needs.

Power Rankings for the sugar commodity has analyzed the power rankings of sugar on the commodities market. It explains that the rankings compare sugar with all of the other listed commodities in United States markets following a set of investment-oriented metrics. These include fund flows for 3-month intervals, the AUM average, ETF expenses, along with average dividend yields. The results include calculations from sugar only with all other classes of assets and inverse ETFs excluded. It provides you with a sense of trends within the sugar industry. Sugar is ranked in the 18th position in the three-month fund flow, 10th in the average three-month return, and 19th in the aggregate has further ranked the commodity in the 15th position for average dividend yield and number 17 for the average expense ratio. Here are three sugar ETFs recommended for consideration with the top two US-based sugar ETFs.

Teucrium Sugar ETF

US News reports that Tecruium Sugar is among the best sugar ETFs available for 2020. Everyday changes in the NAV of Teucrium's shares are reflected as the sugar market moves. Future delivery is monitored and measured following a weighted average of the prices at closing settlements for three sugar futures contracts. These contracts are traded on the ICE Futures US. The investment objective of the fund is to invest in Benchmark Component Futures Contacts under normal market conditions. Management uses the full amount of the assets of the fund for trading sugar futures contracts and making investments in cash and the equivalents of cash. The attractiveness of his ETF to investors is that it offers exposure to investment in sugar companies indirectly. Investments are less volatile than direct investments into the stocks of companies involved in the sugar industry.

Wisdom Tree Sugar ETF highlights Wisdom Tree Suger ETF as a recommendation for those who wish to diversify with exposure to the sugar commodity. Wisdom Tree is classified in the financial sector under miscellaneous financial services. Wisdom Tree is an equity-based ETF in the United Kingdom market. ETFS is the issuer of the notes. The Wisdom Tree ETF lists in the commodity for its general class. Bloomberg Sugar TR is underlying. The principal activity of the fund deals with short and leveraged commodity contracts and classic and longer-dated commodity contracts. The company facilitates the trading of Wisdom Tree Sugar ETF investments covering commodities including, but not limited to the sugar market solely, with fixed income and equities traded on exchanges throughout the world. This ETF may be one you wish to consider if you desire an asset distribution over a broad range of industries.

iPath Series B Bloomberg Sugar Subindex Total Return ETN/ETF

According to Zacks, SGG is an agricultural exchange-traded fund listed on the New York Stock Exchange with a focus on the sugar commodity. The ETF expense ratio is 0.45% with a dividend yield of 0%. The issuer is Barclays Bank. This ETF provides investors with exposure to the sugar market through the Bloomberg Sugar Subindex Total Return, reflecting the returns available through futures contracts on companies involved in either the growth, harvest, manufacture or distribution of sugar in an unleveraged format. Since its inception, The overarching goal of this fund is to present a benchmark for sugar as an asset class. SGG has made no dividend distributions. Returns hoped for are earned on cash collateral.

Final thoughts

Any investment in commodities represents a risk to investors. Sugar is a cyclical agricultural-based commodity that is subject to a variety of influences and potential impacts. Production volumes depend on climate and weather conditions. Harvesting, marketing, and export of sugar depend on political and economic conditions. Multiple influences have the potential to either positively or negatively impact the companies involved in the sugar industry. Futures contracts through an exchange-traded fund are managed uniquely with methods that lessen volatility and risk for investors. Each contract should be looked at closely to determine the particulars about investment duration and contract expirations for any limitations on trading. They offer a less expensive vehicle for investing indirectly in the sugar commodity. It is worth noting that sugar has been on an upswing in recent months. Before making your decision, it's wise to consult with your financial advisor about which sugar ETF will be the best for inclusion in your investment portfolio.

Allen Lee

Written by Allen Lee

Allen Lee is a Toronto-based freelance writer who studied business in school but has since turned to other pursuits. He spends more time than is perhaps wise with his eyes fixed on a screen either reading history books, keeping up with international news, or playing the latest releases on the Steam platform, which serve as the subject matter for much of his writing output. Currently, Lee is practicing the smidgen of Chinese that he picked up while visiting the Chinese mainland in hopes of someday being able to read certain historical texts in their original language.

Read more posts by Allen Lee

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