Playing the Fields

SAL GILBERTIE sells down-to-earth inflation hedges: funds that hold futures contracts on crops like corn and soybeans

- William Baldwin

The dollar is weak, the world is hungry and the Russians are making a mess of the grain markets. Would you be interested in a food-based inflation hedge?

Sal Gilbertie, farm-family scion turned money manager, has just the thing. His Teucrium Trading offers pure-play exchange-traded funds that hold futures positions in corn, wheat, soybeans and sugar. When the conditions are right, these things add quite some spice to your portfolio.

In the space of four weeks beginning just before the invasion of Ukraine last year, Teucrium Wheat zoomed up 65%. Over the past three years the soybean ETF is up 92%, the sugar fund 162%. Of course, agricultural commodities can sink just as easily. Wheat has given up all last year’s gain. Beans and sugar fared very poorly over the decade of low inflation that preceded the pandemic.

Why subject yourself to such uncertainty? To get diversification. The low correlation between grains and stocks means that a blend ought to be less volatile than either asset alone. In 10 of the 11 stock market corrections of 10% or more since 1998, Gilbertie says, the S&P grains index has beaten stocks.

As a commodities trader, Gilbertie, 63, has spent his entire career in finance. But he has farming in his blood. You get a taste of that when you visit his office in rural Easton, Connecticut. His desk is in a tiny room cluttered with sacks of seeds and housed in a ramshackle building alongside 36 acres of fields and greenhouses. Teucrium’s nine other employees are scattered to the winds, in Vermont, Minnesota and other states.