Agricultural Fund "I'm the Best"

8.89% Monthly Return... Highest Among 43 Thematic Funds

[Asia Economy Reporter Song Hwajeong] The returns on agricultural product funds continue to soar. The rise in agricultural product prices due to abnormal weather conditions is leading to favorable fund returns.

According to financial information company FnGuide on the 29th, the recent one-month return of 9 agricultural product funds with assets under management of over 1 billion KRW recorded 8.89%. This is the highest level among 43 theme funds.

By fund, Samsung KODEX 3 Major Agricultural Products Futures Special Asset Listed Index Investment Trust [Agricultural Products - Derivative Type] (H) recorded a return of 11.42% over the past month. In addition, Mirae Asset TIGER Agricultural Products Futures Special Asset Listed Index Investment Trust [Agricultural Products - Derivative Type] posted 9.95%, Shinhan BNPP Agriculture Index Plus Investment Trust 1 [Bond - Derivative Type] (Type A) 9.05%, and Samsung KODEX Soybean Futures Special Asset Listed Index Investment Trust [Soybean - Derivative Type] (H) achieved 7.89% returns.

According to Bloomberg, as of the closing price on the 27th, soybeans rose 16.4% compared to the end of last year. Wheat increased by 10.7%, and corn by 6.7%, respectively.

Hwang Byungjin, a researcher at NH Investment & Securities, said, "In the recent three months, the agricultural product sector showed the most remarkable increase in the commodity market," adding, "Since May, as oil prices attempted to rebound and investors escaped deflation fears, interest in inflation hedging has increased, while global, especially U.S., inventory burdens have decreased, improving investment sentiment in the agricultural product sector."

The strength of agricultural product funds is due to the positive turnaround of supply variables caused by abnormal weather impacts. Researcher Hwang analyzed, "The strength of the agricultural product sector is mainly driven by the positive turnaround of supply variables that have acted as downward price pressure over the past eight years," and added, "Global climate and foreign exchange are representative supply variables, and both major factors have turned into price positives supporting the agricultural product sector's strength in the second half of the year." The U.S. Department of Agriculture (USDA) has lowered its production and ending stock forecasts for U.S. corn and soybeans for three consecutive months from mid-third quarter due to La Ni?a, which has worsened crop conditions. Recently, in Brazil, concerns about delayed planting amid hot and dry weather have emerged as potential threats to grain production. Along with this, the weak dollar is also analyzed to have enhanced the competitiveness of U.S. products in export markets and boosted investor optimism across the agricultural product sector.

There is also a positive outlook for the agricultural product sector if Democratic presidential candidate Joe Biden wins the upcoming U.S. presidential election. Kim Sohyun, a researcher at Daishin Securities, said, "If Biden is elected, agricultural product investment is positive," adding, "Growth in the U.S. biofuel industry is expected to increase demand for corn (for ethanol) and soybeans (for biodiesel)."