ETF Spotlight: Powershares DB Agriculture

| About: PowerShares DB (DBA)
ETF Spotlight on PowerShares DB Agriculture Fund (NYSEARCA:DBA), part of an ongoing series.

Assets: $3.16 billion

Objective: The PowerShares DB Agriculture Fund tries to reflect the performance of the Diversified Agriculture Index Excess Return, which is comprised of futures contracts on the most liquid and widely tracked agriculture commodities.

Holdings: Cattle 4.68%, Cocoa 11.23%, Coffee 12.40%, Corn 13.67%, Cotton $2 2.85%, Lean Hogs 8.16%, Live Cattle 12.26%, Soybeans 13.06%, Sugar #11 11.60%, Wheat 4.66% and Wheat 5.41%.

What You Should Know

  • DBA has an expense ratio of 0.85%.
  • The fund tracks contracts with expiration dates as far out as 13 months that stand to maximize gains or minimize losses posed by the implied roll yield, according to Morningstar analysts.
  • The sub-sector has posted “standout returns, as demand for foodstuffs and biofuel inputs have handily outstripped supply,” the analysts added. “Increasing agricultural commodity prices have driven investor interest in pure-play agricultural commodity products like this fund.”

The Latest News

  • Street One Financial recently commented on increased “volatility buying” in agribusiness ETFs as investors are “are positioning for heightened levels of volatility (but uncertain of direction) in the ETF going forward.”
  • The long-term fundamentals of agriculture ETFs are based in part on rising food inflation and population growth. Still, prices of major farm commodities should ease from highs seen in the past year as the rally drives higher output, some researchers predict.
  • Wholesale prices of agricultural products are up 9% from one year ago, and the current jump in global food prices has put 4 million more people into poverty.

PowerShares DB Agriculture Fund

Max Chen contributed to this article.