Friday, September 7, 2007

This MOO for You? An ETF to Play the Global Agriculture Boom

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One of the themes the fund is currently investing in is the secular agricultural boom as people in developing economies upgrade their food quality, as their incomes grow. Thus far, I have been focused mostly on the fertilizer companies, although the equipment and seed plays have also done great. However, in the past few days I have read multiple articles on a new ETF which, if you want to play this trend in 1 fell swoop, provides an interesting (and global) way to diversify across multiple subtrends on this play. The ETF is called Market Vectors Agribusiness (MOO) ... yes MOO. How cute. Here is a fact sheet about the ETF.

Anyhow multiple press outlets have reported on this from Realmoney.com today (subscribers only), to Investor's Business Daily to IndexUniverse.com blog (this latter article has a chart of the top 10 holdings). Here are some details from the two free articles.

  • The fund tracks the DAX Agribusiness Index, and charges 0.65% in annual expenses.
  • Its only ostensible competitor, the Powershares DB Agriculture Fund (DBA), takes an entirely different approach to the space. DBA invests in agricultural futures contracts, while MOO invests in agriculture-related companies. The two are driven by completely different dynamics, and have performed very differently: DBA is up 9.67% year-to-date, while the index underlying MOO is up 32.40%. Both figures are as of July 31.
  • MOO is a truly global fund, holding 40 companies trading on 13 global exchanges worldwide. In addition to meeting minimum volume requirements, components of the index must be worth at least $150 million. The United States dominates the index with a 55% weighting -- the next-largest country is Canada at 9.3% of the index.
  • The DAX Agribusiness Index covers several areas of the agriculture market, including agriculture chemicals at 34.3% of the index, agriproduct operations (33.5%), agricultural equipment (24.3%), livestock operations (5.6%) and ethanol/biodiesel (2.3%).
  • Tokyo-based Komatsu, the world's second-biggest maker of construction and mining machinery, is the fund's largest holding. It accounts for 9% of assets.
Interestingly our old pork friend Smithfield Foods (SFD) is a small holding in this fund (1%) - hah.

So for one who wants exposure to this trend, but not necessarily picking and choosing individual names, this looks like an attractive offering.

No positions

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