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

    The ABCs of Bond ETF Distributions

    How do bond exchange traded fund (ETF) distributions work? It’s a question I get a lot. First, let’s explain what we mean by distributions.
  2. Investing Basics

    Top Tips for Diversifying with Exotic Currencies

    Is there an opportunity in exotic currencies right now, or are you safer sticking to the major ones?
  3. Mutual Funds & ETFs

    The 3 Biggest Mutual Fund Companies in the US

    Compare and contrast the rise of America's big three institutional asset managers: BlackRock Funds, The Vanguard Group and State Street Global Advisors.
  4. Stock Analysis

    3 Stocks that Are Top Bets for Retirement

    These three stocks are resilient, fundamentally sound and also pay generous dividends.
  5. Professionals

    5 Top-Rated Funds for Your Retirement Portfolio

    Mutual funds are a good choice for emotional investors. Here are five popular funds to consider.
  6. Investing News

    Are Stocks Cheap Now? Nope. And Here's Why

    Are stocks cheap right now? Be wary of those who are telling you what you want to hear. Here's why.
  7. Investing News

    4 Value Stocks Worth Your Immediate Attention

    Here are four stocks that offer good value and will likely outperform the majority of stocks throughout the broader market over the next several years.
  8. Investing News

    These 3 High-Quality Stocks Are Dividend Royalty

    Here are three resilient, dividend-paying companies that may mitigate some worry in an uncertain investing environment.
  9. Stock Analysis

    An Auto Stock Alternative to Ford and GM

    If you're not sure where Ford and General Motors are going, you might want to look at this auto investment option instead.
  10. Mutual Funds & ETFs

    The 4 Best Buy-and-Hold ETFs

    Explore detailed analyses of the top buy-and-hold exchange traded funds, and learn about their characteristics, statistics and suitability.
  1. Can mutual funds invest in IPOs?

    Mutual funds can invest in initial public offerings (IPOS). However, most mutual funds have bylaws that prevent them from ... Read Full Answer >>
  2. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  3. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  4. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  5. Does index trading increase market vulnerability?

    The rise of index trading may increase the overall vulnerability of the stock market due to increased correlations between ... Read Full Answer >>
  6. What does a high turnover ratio signify for an investment fund?

    If an investment fund has a high turnover ratio, it indicates it replaces most or all of its holdings over a one-year period. ... Read Full Answer >>

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!