This ETF (MOO) Stands Out Among Most “Commodity” ETFs

cow-moo“I wrote about the coming global food revolution as the “trade of the decade” earlier this week and highlighted some of the top stocks to consider

: Archer Daniels Midland (ADM), Monsanto (MON), Potash (POT), Mosaic (MOS), and Deere & Co. (DE). What I forgot to mention was an easy and conservative way to get to these names through the MarketVectors Agribusiness ETF (MOO). These five stocks are in the top seven holdings in MOO and comprise approximately one-third of the ETF’s weight. MOO has rallied 80% since it’s March lows to a 15-month high of $45.57, and it’s up 125% from the $20-level it hit in November 2008. As I noted in the piece on Tuesday, ag stocks made significant lows during the height of the credit crisis but did not make new lows in March, making this a leading industry group along with technology shares,” Kevin Cook Reports From ONN TV.

“This ETF stands out among most “commodity” ETFs because it doesn’t use futures contracts or swaps to invest. This avoids the problems we see in ETFs for oil, natural gas and grains like the USO, UNG and PowerShares DB Agriculture Fund (DBA). Investors who thought they could capitalize on top commodity investor Jimmy Roger’s thesis that agriculture has the most attractive fundamentals of any sector have probably bought the DBA ETF hoping to ride the wave,” Cook Reports.

“But the truth is that DBA, which recently expanded from investing in corn, wheat, soybeans and sugar futures to include soft commodities and livestock, has performed terribly relative to MOO, marking less than an 8% return in the past year. This is more proof that before you invest in an ETF you need to understand what the holdings are and what they are trying to track. A basket of stocks in an industry group or sector might have much more predictable results than one that uses futures contracts and commodity swaps to create returns or track an opaque index,” Cook Reports.

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The investment (DBA) seeks to track the price and yield performance, before fees and expenses, of the Deutsche Bank Liquid Commodity Index – Optimum Yield Agriculture Excess Return. The index is a rules-based index composed of futures contracts on some of the most liquid and widely traded agricultural commodities – corn, wheat, soy beans and sugar. The index is intended to reflect the performance of the agricultural sector.

TOP 10 HOLDINGS ( 90.10% OF TOTAL ASSETS)  
 
Company Symbol % Assets
COCOA FUTURE DEC 09 N/A 16.69
COFFEE ”C” FUTURE DEC09 N/A 10.91
CORN FUTURE MAR 10 N/A 4.04
CORN FUTURES DEC 09 N/A 7.18
LEAN HOGS FUTURE DEC09 N/A 3.89
LIVE CATTLE FUTUR DEC09 N/A 7.75
SOYBEAN FUTURE JAN10 N/A 4.49
SOYBEAN FUTURE NOV10 N/A 9.08
SUGAR #11(WORLD) JUL10 N/A 20.7
WHEAT FUTURE(KCB) JUL10 N/A 5.37

The investment (MOO) seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the DAXglobal Agribusiness index. The fund normally invests at least 80% of total assets in equity securities of U.S. and foreign companies primarily engaged in the business of agriculture, which derive at least 50% of their total revenues from agribusiness. Such companies may include small- and medium-capitalization companies. It is nondiversified.

TOP 10 HOLDINGS ( 60.56% OF TOTAL ASSETS)  
 
Company Symbol % Assets
ARCHER DANIELS MDLND ADM 4.57
  PDA 3.98
DEERE CO DE 4.53
Kubota Corporation N/A 4.24
MONSANTO COMPANY MON 8
POTASH CP SASKATCHEW POT 8.11
SOCIEDAD DE CHILE SC SQM 4.09
SYNGENTA AG ADS SYT 7.68
MOSAIC COMPANY (THE) MOS 7.42
Wilmar F34.SI 7.94

Chart for PowerShares DB Agriculture (DBA)

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