4 Options for Investing Long-Term in Demographic Realities

Brittney Barrett  |

Global economic growth is slowing. Nations from Germany to China and the U.S. are reporting lower than expected progress for the year and many investors are concerned that no immediate catalyst exists to change that trajectory. The recently amended predictions for the U.S. growth rate, from 1.3 percent to 1 percent is sounding an alarm and sending investors into already bloated safe havens. The overarching attitude of the market right now appears to be “unsure,” as indicated by the huge swings and persistent volatility.

The lowered credit rating and a range of other factors have formed a market that’s difficult to navigate. The new terrain makes it a challenge to predict what will rise and what will fall. One thing is rising without a doubt; however and that is the global population.

More people, especially a larger middle class from the likes of China and India, calls for more food. This in turn, helps bolster commodity prices, push up ETFs and heightens the demand on farmers. An investor can choose to play this in a number of ways, through equities, like Potash (POS) and Mosaic (MOS), which supply the resources to increase crop yields or through ETFs which track commodities like corn and wheat.

Agricultural ETFs have been on the rise through 2011 and while they have fallen slightly in recent trading, most remain near their March highs. These numbers can be predicted to continue their rise alongside higher futures for corn, coffee, soybeans and wheat which have been consistently trending higher. Investing in a large basket of commodities is often the safest bet and the popular Market Vectors Agribusiness ETF (MOO), which tracks these levels, can be a great way to play this. Alternatively, the futures-focused PowerShares DB Agriculture Fund  (DBA) also looks appeaing based on the last three months of positive growth.

The prices are increasing alongside demand from emerging nations and general growth. Worry over outstripping supplies help to drive up both the demand for higher yields and thus the revenue of companies like Potash and Mosaic, as well as the selling price of the crops themselves.


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