The Market Vectors Agribusiness ETF (ARCA:MOO) is 20% off its 2008 high, as the S&P 500 is trading at a fresh four-year high. MOO is not the only agriculture-related ETF to struggle over the last year. Both the Global X Fertilizers/Potash ETF (ARCA:SOIL) and the IQ Global Agribusiness Small Cap ETF (ARCA:CROP) are lagging the overall market.

Investopedia Broker Guides: Enhance your trading with the tools from today's top online brokers.

The Ag ETF Leader
MOO is the largest of the three with $6.11 billion in assets under management. The ETF is composed of 49 stocks that are mostly considered large-cap companies. The U.S. accounts for 38%, followed by Canada at 14% and Singapore at 10%. The top holdings are the "who's who" of agribusiness worldwide. Monsanto (NYSE:MON), Potash (NYSE:POT) and Deere & Co. (NYSE:DE) are the top three that account for 23% of the entire ETF.

The expense ratio is 0.56%, and year-to-date the ETF is up 13%.

SEE: Valuing Large-Cap Stocks

Fertilizer ETF
Slightly beating MOO in 2012 is SOIL, which concentrates on the largest and most liquid global companies in the fertilizer business. There is some overlap between the top 10 holdings of MOO and SOIL. A total of four stocks appear in both top 10 lists with Swiss firm Syngenta (NYSE:SYT) a top-six holding in both ETFs.

The major difference between SOIL and MOO is the stronger concentration that SOIL offers investors. By focusing on the fertilizer niche of the agricultural chemical sector, the number of stocks is limited. A total of 29 stocks make up the ETF, and the U.S. accounts for 26% and Canada 12%. The expense ratio on SOIL is slightly higher at 0.69%.

Small-Cap Ags
CROP takes a similar approach to MOO in investing, with one major difference - company size. CROP invests in global small-cap stocks in the agribusiness sector. There is zero overlap of top 10 holdings between CROP and the first two ETFs highlighted. The 58 stocks in the ETF that charge 0.75% in annual fees offer a niche opportunity for investors that feel the small-cap stocks have a better chance of outperforming their large-cap counterparts. So far in 2012, all three ETFs have similar returns with CROP up 12% and SOIL up 14%.

Choosing an Ag ETF
What makes this decision so difficult is that each ETF offers exposure to specific areas the others do not. The ETF for an overall play on the sector with exposure to the big names is clearly MOO, the leader in this sector. However, that will cost investors exposure to the sector's small-cap stocks that CROP specializes in. And if the goal is to concentrate on fertilizers and remove the equipment stocks and others, then SOIL is the best option. I suggest a combination of the three if it is feasible for investors, or at the very least a combination of MOO and CROP would be sufficient.

SEE: 5 Must-Have Metrics For Value Investors

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

At the time of writing, Matthew McCall did not own shares in any of the companies mentioned in this article.

Related Articles
  1. Investing

    Time to Bring Active Back into a Portfolio?

    While stocks have rallied since the economic recovery in 2009, many active portfolio managers have struggled to deliver investor returns in excess.
  2. Chart Advisor

    Now Could Be The Time To Buy IPOs

    There has been lots of hype around the IPO market lately. We'll take a look at whether now is the time to buy.
  3. Stock Analysis

    Allstate: How Being Boring Earns it Billions (ALL)

    A summary of what Allstate Insurance sells and whom it sells it to including recent mergers and acquisitions that have helped boost its bottom line.
  4. Chart Advisor

    Copper Continues Its Descent

    Copper prices have been under pressure lately and based on these charts it doesn't seem that it will reverse any time soon.
  5. Options & Futures

    Cyclical Versus Non-Cyclical Stocks

    Investing during an economic downturn simply means changing your focus. Discover the benefits of defensive stocks.
  6. Mutual Funds & ETFs

    Buying Vanguard Mutual Funds Vs. ETFs

    Learn about the differences between Vanguard's mutual fund and ETF products, and discover which may be more appropriate for investors.
  7. Mutual Funds & ETFs

    ETFs Vs. Mutual Funds: Choosing For Your Retirement

    Learn about the difference between using mutual funds versus ETFs for retirement, including which investment strategies and goals are best served by each.
  8. Mutual Funds & ETFs

    How to Reinvest Dividends from ETFs

    Learn about reinvesting ETF dividends, including the benefits and drawbacks of dividend reinvestment plans (DRIPs) and manual reinvestment.
  9. Investing Basics

    How to Deduct Your Stock Losses

    Held onto a stock for too long? Selling at a loss is never ideal, but it is possible to minimize the damage. Here's how.
  10. Mutual Funds & ETFs

    Best 3 Vanguard Funds that Track the Top 500 Companies

    Discover the three Vanguard funds tracking the S&P 500 Index, and learn about the characteristics and historical statistics of these funds.
  1. Should mutual funds be subject to more regulation?

    Mutual funds, when compared to other types of pooled investments such as hedge funds, have very strict regulations. In fact, ... Read Full Answer >>
  2. Do ETFs pay capital gains?

    Exchange-traded funds (ETFs) can generate capital gains that are transferred to shareholders, typically once a year, triggering ... Read Full Answer >>
  3. How do real estate hedge funds work?

    A hedge fund is a type of investment vehicle and business structure that aggregates capital from multiple investors and invests ... Read Full Answer >>
  4. Are Vanguard ETFs commission-free?

    While some Vanguard exchange-traded funds (ETFs) are available commission-free from third-party brokers, a large portion ... Read Full Answer >>
  5. Do Vanguard ETFs require a minimum investment?

    Vanguard completely waives any U.S. dollar minimum amounts to buy its exchange-traded funds (ETFs), and the minimum ETF investment ... Read Full Answer >>
  6. Can mutual fund expense ratios be negative?

    Mutual fund expense ratios cannot be negative. An expense ratio is the sum total of all fees charged by an asset management ... Read Full Answer >>

You May Also Like

Trading Center