ETF Talk: Watching for the Cows to Come Home

Doug Fabian

Doug Fabian is known for his expert knowledge of ETFs, bear funds and enhanced index funds to profit in any market climate.

Every human needs food to survive, so wouldn’t it be great to make money from it? As a matter of fact, we can. The global agriculture business provides a fairly stable investment with growth potential. In particular, I am eying Market Vectors Agribusiness ETF (MOO) because it offers a way to tap the growing global demand for food, especially from emerging markets.

After beginning the year at $47.15, MOO has climbed to $52.60 as of midday today, despite minor fluctuations in price throughout the first quarter of 2012.

The Market Vectors Agribusiness ETF (MOO) seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the DAXglobal Agribusiness Index. Because the fund is composed of companies that derive at least 50% of their revenues from the agriculture business, the fund’s fate is closely tied to that of the agriculture industry. This fact is comforting, given agriculture’s recent growth in emerging markets and the simple fact that food always is in demand.
The top five holdings in MOO, as of May 1, were Monsanto Co (MON), 7.59%; Potash Corporation (POT), 7.26; Syngenta Ag-Reg (SYNN VX) 7.26; Deere & Co (DE), 7.18%; and Wilmar International (WIL SP) 5.95%. Though individually, some of these holdings are down year-to-date, the agricultural industry has been rising steadily during the past month. If you are like me, having some stable investments makes you feel better about the overall safety of your portfolio.

Although MOO does not track a particularly lucrative sector, the fund is appealing, in part, because agricultural products have exhibited a slow rise in demand during the past several years. Geographically, the fund has 38.4% of its holdings in the United States, 13.5% in Canada and 10.4% in Singapore, with additional holdings in Malaysia, Brazil, Norway, Japan, and the Netherlands. As indicated, this fund is extremely geographically diverse, which provides additional opportunity for growth, while also adding to MOO’s stability.

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As I expected, global markets bounced strongly after last week's pullback. The Dow Jones rose 2.14%, hitting a four-year high. The S&P 500 was up 2.47%. The MSCI Emerging Markets index also found its footing, matching the Dow's rise of 2.14%.
 
Almost all of your positions in your Alpha Investor Letter portfolio were up for the week. Your position in The TJX Companies (TJX) was the week's top performer, leaping 4.47%.

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