Agricultural ETF 'Market Vectors Agribusiness (MOO)" 2013.6.5

 

 

The world’s population could top nine billion people by the year 2050, according to projections, and all of those people are going to boost demand for food. Even today, developing nations and increasing populations are raising global demand for food production. As such, farming, and all its component stages, should benefit. The appropriately named Market Vectors Agribusiness (MOO) is an exchange-traded fund (ETF) which is invested in many of the farming industry’s various aspects and should profit from this need for heightened farm production.

 

This non-diversified fund seeks results which, before fees and expenses, match the performance of an index that tracks various fields within the farming industry, such as: agri-chemicals, fertilizers, seeds and traits; irrigation equipment and farm machinery; and agricultural products like flour, grain, meat, poultry and sugar, aquaculture and fishing, live stocks and plantations.

Though MOO has gained only 1.63% so far this year, the fund is capable of solid gains like 2012’s 11.90% rise. For investors interested in additional income, MOO offers a dividend yield of 1.80%. Although weather can have a big impact on agricultural output, the long-term prospects of this fund are compelling because of the continued certainty of global food consumption as the population grows.

 

Since MOO’s investments are spread out across the agricultural economy, this ETF has holdings in several sectors which assist and/or are assisted by farming. The biggest chunk, 52.47%, is invested in basic materials, while the remaining MOO assets are in consumer defensive, 27.51%, industrials, 17.86%, and consumer cyclical, 2.16%.

MOO’s top ten individually held companies comprise 58.25% of the fund’s total assets. And the top five of these holdings feature a fairly even distribution. In addition, these five holdings are companies that sell agricultural equipment, chemicals and seeds: Monsanto Company (MON), 8.33%; Syngenta AG (SYT), 7.60%; Deere & Company (DE), 6.71%; Potash Corp. of Saskatchewan, Inc. (POT.TO), 6.54%; and Archer-Daniels-Midland Company (ADM), 6.30%.

 

There are risks inherent in investing in agriculture. one is that demand for agricultural products and supplies depends on commodity prices, such as grain. Another is the success of a harvest. Naturally, bad weather can be devastating. Although MOO’s performance can be hit in the short run due to these and other risks, demand for agricultural supplies ultimately will drive the fund’s performance in the long run, especially as rising populations demand increasing amounts of food.

 

Meanwhile, 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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Agribusinesses ETF (MOO): Farming Favorites

Posted Oct 26th 2010 12:30PM by Steven Halpern
Filed under: International Markets, Newsletters, ETF Investing, Commodities, Agriculture, Stocks to Buy

 

"Market Vectors Agribusiness ETF (MOO) offers a great opportunity to capitalize on the move in the sector; the fund focuses on the 40 most actively traded companies in the agriculture chemical and product business," says Jim Farrish.

The exchange-traded fund specialist and editor of SectorExchange.com explains, "Below, we review the ETF as well as some individual agriculture-based stocks poised to break out on the upside.

"The agriculture stocks have been moving up aggressively since the end of June. The initial push came on the drought issues in Russia and wheat production.

"Then BHP Billiton started a hostile takeover bid for POT and the race was on. The buyout set a benchmark or valuation for the agri-chemical businesses.

"The corn crops in the U.S. were below expectations and thus corn prices have moved higher. This all begs the question -- is the run higher done? Is the risk of ownership in the sector too high?

"The bottom line is demand, and we all know that demand puts pressure on price and for now that demand is likely to remain.

"The break above the January high technically shows the continued strength in the sector. The recent pullback near $48.50 is the kind of pullback we are looking for to add to our existing positions.

one approach to the sector is to hold MOO as it continues to move higher. Another approach is to dig into the ETF and track the the individual stocks offering the best opportunities both short and long term.

"The ETF holds 49 stocks both global and US. Scanning through the list shows opportunities that have continued to unfold.

"The challenge is finding a good entry point in these fast moving stock. You have to be patient and define your entry points, if you miss them pass and keep digging.

"Bunge Limited (BG) is a producer of food and food ingredients. The stock is breaking higher and ready to move toward the January high of $70.

"It is currently trading at the $60 to $61.50 range and barring a break down this is a good point to plan your entry.

"Corn Products International (CPO) shows a cup and handle pattern and technically is ready to break higher above $39.80. They are in the food products business of manufacturing an distributing corn based goods.

"Archer Daniels Midland (ADM) has been consolidating near the highs at $33.60 and is ready to break higher as well.

"The increased talk around ethanol production in the US has helped the stock move higher. Watch for a clearly defined break higher short term.

"It doesn't take long to scan through the 49 stocks and find the opportunities. Define your entry, your exit/stop and your target.

"This allows you to determine the risk/reward relationship and define the objective relative to your portfolio.

"Remember, the sector has moved higher since the low in June and the best opportunities may be in the previous leaders which have pulled back, tested support and are poised to break higher. As an alternative to researching individual stocks, stick with MOO."

Steven Halpern's TheStockAdvisors.com offers a free daily review of the favorite stock ideas of the nation's top financial newsletter advisors.