Two More Commodity Equity ETFs from Jefferies: Global Agriculture and Industrial Metals

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 |  Includes: AAUKY, ADM, BLT, CRBA, CRBI, CRBQ, DE, FCX, MON, MOO, MXI, PAGG, POT, RIO, SYT, VALE, XME
by: Ron Rowland

Jefferies is taking advantage of the uncertainty surrounding CFTC activity in the ETF marketplace by launching two more commodity-oriented funds that bypass CFTC intervention. The Jefferies | TR/J CRB Global Agriculture Equity Index Fund (NASDAQ:CRBA) and the Jefferies | TR/J CRB Global Industrial Metals Equity Index Fund (CRBI) began trading today. Both ETFs invest in equities of commodity producers – not the actual commodities.

As you may recall, Jefferies arrived on the ETF scene a little over a month ago with the launch of Jefferies | TR/J CRB Global Commodity Equity Index Fund (NYSEARCA:CRBQ). CRBQ is based on Thomson Reuters/Jefferies In-The-Ground CRB Global Commodity Equity Index, which tracks a broad range of commodity producers. The two new ETFs use the same approach with CRBA seeking to track the agriculture subset and CRBI tracking the industrial metals subset. Both funds will have a 0.65% expense ratio.

Unfortunately, Jefferies has supplied no new information about these new ETFs or today’s launch, except what is available in the 9/21/09 amended prospectus (pdf). There are no fact sheets or overviews available. Holdings are unknown. Here is what can be gleaned from the filing:

The Jefferies | TR/J CRB Global Agriculture Equity Index Fund (CRBA) consists of the 35 agricultural stocks that are in the CRBQ composite fund. That would indicate that the largest holdings are likely to be Monsanto (NYSE:MON), Potash (NYSE:POT), Syngenta (NYSE:SYT), Archer-Daniels-Midland (NYSE:ADM), and Deere & Co (NYSE:DE).

CRBA is the third ETF to focus on agriculture stocks. Its primary competitor is Market Vectors Agribusiness ETF (NYSEARCA:MOO), which was launched 8/31/07. MOO is more diversified, with 47 stocks in its portfolio, while also having a lower 0.59% expense ratio. PowerShares Global Agriculture Portfolio (NASDAQ:PAGG) is also in this space. It was launched 9/19/08, has about 40 holdings, and has an expense ratio of 0.75%.

Jefferies | TR/J CRB Global Industrial Metals Equity Index Fund (CRBI) consists of the 35 base industrial metals stocks that are in the CRBQ composite fund. That would indicate the largest holdings are likely to be Rio Tinto (NYSE:RIO), BHP Billiton (NYSE:BLT), Anglo American (OTCPK:AAUKY), Vale (NYSE:VALE), and Freeport-McMoRan Copper & Gold (NYSE:FCX).

The most direct competitor to CRBI is likely to be iShares S&P Global Materials Index Fund (NYSEARCA:MXI). MXI has been around for more than three years (launched 9/22/06) and has an expense ratio of 0.48%. Another ETF in this space is SPDR S&P Metals & Mining ETF (NYSEARCA:XME). However, it only invests in US based companies.

The prospectus (pdf) covers five funds in all. With three of them now launched, the two remaining ones are Jefferies | TR/J CRB Global Energy Equity Index Fund (CRBE) and Jefferies | TR/J CRB Global Precious Metals Equity Index Fund (CRBG). There was no indication as to when they would start trading, but my guess is that we will see them before the end of the year.

Note: There is still time to be the first buyer because no shares have traded in either of the new ETFs so far this morning. At around 11:30 (eastern) CRBA has a bid/ask of $38.90/$39.10 and CRBI has a bid/ask of $38.64/$38.82.

Disclosure compliant with FTC 16 CFR Part 255 covering myself and my employer: No positions in any securities mentioned. No positions in any of the companies or ETF sponsors mentioned. No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.