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By Market News Video Staff, Monday, April 18, 10:47 AM ET
by Max Blythe
After falling in 2008, prices for agricultural commodities have again spiked. In the past year, metric ton of wheat has gotten pricier by a full 65.79%, with strong upward trend starting in July 2010. Increasing wealth in emerging markets has enriched local consumers, who are switching to a richer diet. As more and more people worldwide join the emerging middle class, food prices across the board will likely raise on the back of increased global demand. There are a number of existing ETFs that allow investors to tap into the upside of increasing food prices.
In terms of performance in the last year, iPath Dow Jones-UBS Agriculture Total Return exchange-traded note (AMEX:JJA) has been the clear winner, gaining a full 59.10%. The note consists of futures of contracts of seven agricultural commodities (soybeans, corn, wheat, cotton, soybean oil, coffee and sugar) and tracks the return of the Dow Jones-UBS Agriculture Total Return Sub-Index. The UBS E-TRACS CMCI Food TR exchange-traded note (AMEX:FUD) was a close second in with gains of 48.85% in the last year. The note, which was created in March 2008, is similar to the iPath DJ-UBS note in that it takes long positions in agricultural futures, tracks the UBS Bloomberg CMCI Food Index and is heavily weighted towards sugar, soybeans and corn.
The PowerShares DB Agriculture Fund (AMEX:DBA) is based on the DBIQ Diversified Agriculture Index Excess Return, which tries to duplicate the performance of the entire agriculture sector. The fund has gained 37.88% in the past year and also includes holdings in cattle and lean hog futures. Finally, the Market Vectors Agribusiness exchange-traded fund (AMEX:MOO), which has gained 23.63% in the past year, is an equity-based ETF that invests in global agribusinesses. The fund’s largest holding is in Deere & Co (NYSE:DE) and the Potash Corp of Saskatchewan (NYSE:POT) and also includes positions in agricultural blue-chips like Archer-Daniels-Midland (NYSE:ADM) and Monsanto (NYSE:MON).
For a complete list of holdings, visit the MOO Holdings page on ETFChannel.com
The ETF Channel Flexible Growth Investment Portfolio is designed to seek growth for investors — anywhere and everywhere. The key to the program is our portfolio strategy allows us complete flexibility in terms of asset allocation as there are no predetermined guidelines as to the level of stocks, bonds, cash, regions, countries, sectors, commodities, or even asset classes in the portfolio! In short, this is a completely flexible portfolio designed to follow the performance trail wherever it leads us.
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