ETF Talk: CROP Offers Agribusiness Exposure

Doug Fabian

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

Agribusiness stocks have showed gains in the past year, despite 2012’s damaging U.S. drought. Increasing world population and emerging economies have contributed to agriculture’s growth. An ETF that tracks the global performance of the agribusiness sector is IQ Global Agribusiness Small Cap ETF (CROP).

This non-diversified fund seeks investment results that correspond to the price and yield performance of its underlying index, which tracks the overall performance of the global, small capitalization sector in agribusiness.

CROP has had a promising gain of more than 5% so far in 2013, and the fund had an impressive growth rate of almost 12% last year. As commodities like corn continue bottoming out in price due to increasing supply, this fund still offers investors a chance to profit due to its agribusiness focus.

The fund tracks an index that offers exposure to global small cap companies engaged in the agribusiness sector, including crop production and farming, livestock operations, agricultural supplies & logistics, agricultural machinery, agricultural chemicals and biofuels. The small cap agribusiness segment is positioned to benefit from rising food prices, increasing populations and the growing demand for alternative fuels.

CROP’s top ten individually held companies comprise 48.19% of its assets. The five biggest holdings among the public companies that compose CROP’s portfolio are: Smithfield Foods, Inc. Common S, 7.83%; Nuveen Ohio Quality Income Munio, 6.61%; Toro Company common stock, 6.05%; Nippon Meat Packers Inc., 5.14%; and Nisshin Seifun Group Inc., 4.59%.

Although agribusiness funds have been a bit slow to gain significant attention from investors, such funds are worth evaluating given the fundamental trends driving the segment such as growing global populations and increasing worldwide food demand.

If you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my Successful Investing newsletter. As always, I am happy to answer any of your questions about ETFs, so do not hesitate to email me by clicking here. You may see your question answered in a future ETF Talk.

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