Everybody needs to eat, and that makes food one of the most durable industries in the market. From grocery staples to agricultural inputs, food demand doesn’t disappear in recessions or bull markets.
For investors, food exchange-traded funds (ETFs offer a simple way to invest across the food supply chain without betting on a single company. These funds can include packaged-food leaders, agricultural producers, equipment makers, and global food distributors.
In a market where investors are thinking more about stability, dividends, and inflation resilience, food ETFs can play a useful role in a diversified portfolio.
Here are five of the best food ETFs to consider today.
Top 5 food ETFs
ETF | Ticker | Total Assets | Expense Ratio | Description |
|---|---|---|---|---|
First Trust Nasdaq Food & Beverage ETF | $16.7 million | 0.6% | Tracks the Nasdaq U.S. Smart Food & Beverage Index | |
Invesco Dynamic Food & Beverage ETF | $94.1 million | 0.61% | Tracks the Dynamic Food & Beverage Intellidex, holding 30 U.S. food and beverage companies | |
VanEck Sustainable Agribusiness ETF | $574.5 million | 0.55% | Tracks the performance of the MVIS Global Agribusiness Index | |
iShares MSCI Agriculture Producers ETF | $84.9 million | 0.39% | Invests in companies engaged in the business of agriculture | |
Global X AgTech & Food Innovation ETF | $6.2 millon | 0.5% | Invests in companies that benefit from advances in the fields of agricultural technology and food innovation |
1. First Trust Nasdaq Food & Beverage ETF
As one of the larger food ETFs, First Trust Nasdaq Food & Beverage ETF (FTXG +1.14%) is a good place to start if you're looking to invest across the food industry. The fund mostly focuses on packaged food companies but also offers exposure to agricultural suppliers.
NASDAQ: FTXG
Key Data Points
2. Invesco Food & Beverage ETF
The Invesco Food & Beverage ETF (PBJ +0.94%) offers a similar mix of companies as First Trust, making it another good choice for investors seeking broad exposure in the food and beverage industry. However, the largest holdings help separate it from the First Trust ETF.
NYSEMKT: PBJ
Key Data Points
NASDAQ: KROP
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How to choose the right food ETF
Not all food ETFs behave the same. Your choice depends on what you want exposure to:
Choose packaged-food ETFs if you want:
- Stability
- Dividends
- Lower volatility
- Defensive positioning
Choose agribusiness ETFs if you want:
- Inflation protection
- Commodity leverage
- Cyclical upside
Choose AgTech ETFs if you want:
- Growth potential
- Innovation exposure
- Long-term thematic bets
Are food ETFs right for you?
Here are several reasons food ETFs can be a smart choice for investors:
- Since food ETFs are primarily made up of consumer staples, they tend to be less volatile than the broad market and outperform in bear markets.
- Food ETFs can be good sources of dividends, as many of their top holdings are proven dividend stocks.
- It's a good way to get exposure to a range of food stocks, many of which are well-established companies and good bets to continue earning profits over the long term.
- Most food stocks are made up of companies that have stood the test of time. They have enduring brands and resilient business models. Buying a food ETF is a great way to get a diverse group of these stocks.
- A food ETF can be a good way to add diversification to a broader portfolio of stocks if you want more low-risk, dividend-paying stocks.
- A food ETF can also be a good way of hedging against inflation, especially companies that can more easily pass along price increases than most companies.
They may be less appealing if you’re chasing high-growth returns or short-term momentum.
Investment strategies and tips for food ETFs
If you're looking for ways to get an edge with food ETFs, here are some tips.
- Consumer staples stocks, like those in food ETFs, tend to get cheaper compared to other stocks in bull markets, and investors seek refuge in them in tough times, making them more expensive. Therefore, bull markets, especially expensive ones, can be good opportunities for investing in food ETFs.
- Investors have a range of options to choose from in food ETFs. While most of these stocks are consumer staples, you can also find industrials like Deere and agriculture stocks, which tend to be cyclical based on commodity prices.
- Since a lot of food stocks are known for dividend growth and are even Dividend Kings, or companies that have raised their dividend for at least 50 years in a row, investing in food ETFs with a Dividend Reinvestment Plan (DRIP) can be a smart long-term strategy.
The bottom line
Food is one of the most essential industries on the planet. Demand is steady, global, and unlikely to disappear.
Food ETFs won’t usually be the fastest-growing investments, but they can provide diversification, income, and resilience, qualities that matter over a full market cycle.
For investors looking to balance growth with stability, they’re worth a look.
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FAQ
Food ETF FAQ
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