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Market Vectors has announced that the Market Vectors Agribusiness ETF (MOO), the largest US-listed agribusiness exchange-traded fund (ETF), is to change its underlying benchmark. The fund currently tracks the DAXglobal Agribusiness Index, but will begin tracking the in-house Market Vectors Global Agribusiness Index in March.
The Market Vectors Global Agribusiness Index is a pure-play index tracking the performance of the largest and most liquid global agribusiness companies.
The index contains only companies that generate at least 50% of their revenues from agrichemicals and fertilisers, seeds and traits, farm and irrigation equipment and machinery, agricultural products (including flour and grain, meat and poultry, and sugar), aquaculture and fishing, livestocks and plantations.
The index, which is weighted by float-adjusted market capitalisation, covers at least 90% of the free-float market capitalisation of the investable universe with at least 25 constituents (the index currently has 53 constituents). The index employs stringent liquidity screens and constituent weighting caps that together are intended to enhance the tradability and diversification of ETFs benchmarked to it.
The top five constituents are Monsanto with a weight of 8.50%, Syngenta with 7.85%, Potash Corp of Saskatchewan with 6.94%, Deere & Co with 6.43%, and Archer-Daniels-Midland with 5.44%. Interestingly, these top four constituents are also the top four constituents in the DAXglobal Agribusiness Index. The DAXglobal index has Archer-Daniels-Midland as the eighth largest holding with a weight of 4.74%. Its fifth largest constituent is Uralkali with a weight of 5.51%; Uralkali is the twelfth largest constituent in the Market Vectors index with a weight of 3.00%.
Commenting on the change, Brandon Rakszawski, Marketing Product Manager at Market Vectors, said: “We expect that MOO will become more diversified as a result of these changes. Constituent capping will continue to help avoid over-concentration in a few large holdings and the pure-play nature of the index will allow MOO to offer truly representative exposure to the agribusiness industry.”
Ed Lopez, Marketing Director at Market Vectors, added: “We believe that the business of food is a critical industry and one that’s growing in importance and potential opportunity for investors. So, it is important for us have an index that best reflects the agribusiness industry and one that matches our philosophy of offering ETFs truly constructed for the asset class they are intended to track.”
UK and European investors looking to access this theme via a locally listed fund should consider the following:
iShares S&P Commodity Producers Agribusiness ETF (SPAG)
Tracks the S&P Commodity Producers Agribusiness Index, a free-float adjusted market-capitalisation index offering exposure to approximately 70 of largest publicly traded companies involved in the agriculture business from around the world. Listed on the London Stock Exchange and the Deutsche Börse.
ETFX S-Net ITG Global Agri Business ETF (AGRP)
Tracks the S-Net ITG Global Agriculture Index, an index comprising approximately 30 global companies that are principally engaged in four primary agricultural sectors: seeds, chemicals and fertilizers; equipment and irrigation; commodity agricultural products; and livestock producers. Listed on the London Stock Exchange, NYSE Euronext, Deutsche Börse, Borsa Italiana and SIX Swiss Exchange.
PowerShares Global Agriculture Nasdaq OMX ETF (PSGA)
Tracks the Nasdaq OMX Global Agriculture Index, a modified market-capitalisation-weighted index comprised of approximately 50 of the largest and most liquid companies engaged in agriculture and farming-related activities that are listed globally. Listed on the London Stock Exchange.
EasyETF BNP Paribas Global Agribusiness ETF (UAG)
Tracks the BNP Paribas Global Agribusiness Index, an index made up of equities of international agriculture companies active in such sectors as fertilizer and industrial machinery production, food production, agricultural commodities trading and alike. The index comprises around 30 securities of companies located in industrialised and emerging countries. Listed on the NYSE Euronext Paris.