ETF Daily: Debut of Small Cap Agribusiness ETF (CROP, MOO, SFD, TSCO, VTRAF)

There has been a ‘agribusiness ETF’ for some time via the Market Vectors Agribusiness ETF (NYSE: MOO).  Now we have a new variation and that is the IQ Global Agribusiness Small Cap ETF (NYSE: CROP) which tracks the small cap universe of companies tied to agribusiness.  This one just launched today and it had traded more than 125,000 shares even at 12:30 AM EST.

The fund tracks the price and yield performance of the IQ Global Agribusiness Small Cap Index. This now offers exposure to global small cap (and mid-cap) companies in the agribusiness sector, including crop production and farming, livestock operations, agricultural supplies & logistics, agricultural machinery, agricultural chemicals, and biofuels. The aim for using smaller-cap components is to benefit from rising food prices, increasing populations, and the growing demand for alternative fuels. The top holdings are listed as follows:

• Viterra Inc. (VTRAF) on the Pink Sheets as it is Canadian with a 9.3% initial weighting;
  Smithfield Foods Inc. (NYSE: SFD) with a 7.97% initial weighting;
  Tractor Supply Company (NASDAQ: TSCO) with an 8.54% initial weighting;
  and Nutreco N.V. from Europe with a 5.47% weighting.

There are more risks associated with this than in traditional US ETFs that focus either mostly or entirely upon US-listed companies.  The fund noted:

“As the Fund’s investments are concentrated in the global agribusiness sector, the value of its shares will be affected by factors specific to that sector and may fluctuate more widely than that of a fund which invests in a broad range of industries. The Fund also may be susceptible to foreign securities risk. Since the Fund invests in foreign markets, it will be subject to risk of loss not typically associated with domestic markets. Loss may result because of less foreign government regulation, less public information, less economic, political and social stability, or other factors. The Fund is exposed to mid and small capitalization companies risk.”

Investors may want to know that the ETF’s expense ratio is 0.75% per year.  There is a saying that goes “There’s an ETF for that” and this one lives up to that mantra.

JON C. OGG