Posted on 14 October 2011.
Investors would do well to build an agriculture ETF list and do so sooner rather than later. The recent downdraft among commodities of all stripes, agricultural commodities included, has not changed the overarching, long-term theme and that is global food demand is soaring. That trend is not going change anytime soon. In fact, the world could be on the cusp of a major food shortage right now.
In that vein, building an agriculture ETF list is an important endeavor for investors, but equally as important is know what members of your agriculture ETF list will make it into your portfolio and which funds are best left alone.
That’s all a matter of personal decision because one can construct an agriculture ETF list comprised entirely of ETFs that track stocks. Or an agriculture list can be built using only ETFs that are plays on agricultural commodities futures. Of course, investors can opt to start an agriculture ETF list merging both types of agriculture ETFs.
If one equity-based ETF makes its way onto your personal agriculture ETF list, make sure its the Market Vectors Agribusiness ETF (NYSE: MOO). At just over four years-old, MOO is the oldest agriculture ETF based on stocks and the largest with over $5 billion in assets under management. Those aren’t the reasons MOO deserves a place your agriculture ETF list.
The reason to put MOO on your agriculture ETF is because of the stocks the ETF holds. Companies like Deere (NYSE: DE), Potash (NYSE: POT) and Monsanto (NYSE: MON) line MOO’s top-10 holdings and these are among the companies that are most levered to the agriculture supercycle. Indeed, MOO should be on everyone’s agriculture ETF list.
There are ETFs that warrant consideration for your individual agriculture ETF list. In terms of specific commodities plays, the Teucrium Corn ETF (NYSE: CORN) is worthy contender because corn demand is soaring. The PowerShares DB Agriculture ETF (NYSE: DBA) gives investors exposure to basket of ag commodities. Also worthy of consideration for your agriculture ETF list are the Global X Fertilizers/Potash ETF (NYSE: SOIL) and the IndexIQ Global Agribusiness Small-Cap ETF (NYSE: CROP).
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