Seeking Alpha
Profile| Send Message| ()  

A relatively small exchange traded fund tracking the global agribusiness sector is one the top-selling ETFs in 2011 as investors tap the fund to make bets on grain and agriculture-related stocks.

Through the end of October, Market Vectors Agribusiness ETF (MOO) raked in net inflows of $3.6 billion year to date, according to National Stock Exchange data. That’s a big haul, considering the fund has about $5.9 billion in assets.

The agribusiness ETF is third on the list of best-selling ETFs for 2011. The most popular ETF this year is Vanguard Emerging Markets (VWO) with inflows of $8.3 billion, followed by iShares MSCI EAFE (EFA), which tracks an index of international developed markets, with $4.4 billion.

The agribusiness portfolio is managed by Van Eck, and charges an expense ratio of 0.56%. In terms of performance, the ETF is down 7.3% year to date, according to Morningstar. The tracking index is the DAXglobal Agribusiness Index.

The ETF was a standout performer during October’s sharp rally in stocks. The biggest stock holdings in the portfolio include Monsanto (MON), Deere (DE) and Potash (POT).

Investors in the ETF should be prepared for a bumpy ride at times due to the volatility of the sector.

“The index is composed primarily of grain-related agribusiness firms, counting the farmer as a chief customer. Farmer behavior is largely determined by notoriously volatile grain prices, so the fortunes of these companies can swing wildly,” Morningstar notes in a profile of the ETF.

“On the upside, volatility has abated relative to the 2008 turmoil and the commodity space has drawn increasing investor interest,” the investment researcher added. “While a sustained drop in grain prices could certainly drive fertilizer prices lower over the coming years, projections of sharp global population increases, the proliferation of biofuels, production concentration in a small number of nations, and a finite allotment of arable land should create upward pressure on those prices in the long run.”

Market Vectors Agribusiness ETF

click to enlarge

Disclosure: None

Source: MOO: Investors Shovel Cash Into Market Vectors Agribusiness ETF