A relatively small exchange traded fund tracking the global agribusiness sector is one the top-selling ETFs in 2011 as investors tap the fund to make bets on grain and agriculture-related stocks.
Through the end of October, Market Vectors Agribusiness ETF (NYSEArca: MOO) raked in net inflows of $3.6 billion year to date, according to National Stock Exchange data. That’s a big haul, considering the fund has about $5.9 billion in assets.
The agribusiness ETF is third on the list of best-selling ETFs for 2011. The most popular ETF this year is Vanguard Emerging Markets (NYSEArca: VWO) with inflows of $8.3 billion, followed by iShares MSCI EAFE (NYSEArca: EFA), which tracks an index of international developed markets, with $4.4 billion.
The agribusiness portfolio is managed by Van Eck, and charges an expense ratio of 0.56%. In terms of performance, the ETF is down 7.3% year to date, according to Morningstar. The tracking index is the DAXglobal Agribusiness Index.
The ETF was a standout performer during October’s sharp rally in stocks. The biggest stock holdings in the portfolio include Monsanto (NYSE: MON), Deere (NYSE: DE) and Potash (NYSE: POT). [Agribusiness ETF Jumps 25% from October Low]
Investors in the ETF should be prepared for a bumpy ride at times due to the volatility of the sector.
“The index is composed primarily of grain-related agribusiness firms, counting the farmer as a chief customer. Farmer behavior is largely determined by notoriously volatile grain prices, so the fortunes of these companies can swing wildly,” Morningstar notes in a profile of the ETF.
“On the upside, volatility has abated relative to the 2008 turmoil and the commodity space has drawn increasing investor interest,” the investment researcher added. “While a sustained drop in grain prices could certainly drive fertilizer prices lower over the coming years, projections of sharp global population increases, the proliferation of biofuels, production concentration in a small number of nations, and a finite allotment of arable land should create upward pressure on those prices in the long run.”
Market Vectors Agribusiness ETF
