MOO: Investors Shovel Cash Into Market Vectors Agribusiness ETF

| About: VanEck Vectors (MOO)

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 (NYSEARCA: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 (NYSEARCA:VWO) with inflows of $8.3 billion, followed by iShares MSCI EAFE (NYSEARCA: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 (NYSE:MON), Deere (NYSE:DE) and Potash (NYSE: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