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. Stock Analysis

    Starbucks: Profiting One Cup at a Time (SBUX)

    Starbucks is everywhere. But is it a worthwhile business? Ask the shareholders who've made it one of the world's most successful companies.
  2. Stock Analysis

    How Medtronic Makes Money (MDT)

    Here's the story of an American medical device firm that covers almost every segment in medicine and recently moved to Ireland to pay less in taxes.
  3. Investing News

    Latest Labor Numbers: Good News for the Market?

    Some economic numbers are indicating that the labor market is outperforming the stock market. Should investors be bullish?
  4. Investing News

    Stocks with Big Dividend Yields: 'It's a Trap!'

    Should you seek high yielding-dividend stocks in the current investment environment?
  5. Investing News

    Should You Be Betting with Buffett Right Now?

    Following Warren Buffett's stock picks has historically been a good strategy. Is considering his biggest holdings in 2016 a good idea?
  6. Products and Investments

    Cash vs. Stocks: How to Decide Which is Best

    Is it better to keep your money in cash or is a down market a good time to buy stocks at a lower cost?
  7. Investing News

    Who Does Cheap Oil Benefit? See This Stock (DG)

    Cheap oil won't benefit most companies, but this retailer might buck that trend.
  8. Investing

    How to Ballast a Portfolio with Bonds

    If January and early February performance is any guide, there’s a new normal in financial markets today: Heightened volatility.
  9. Stock Analysis

    Performance Review: Emerging Markets Equities in 2015

    Find out why emerging markets struggled in 2015 and why a half-decade long trend of poor returns is proving optimistic growth investors wrong.
  10. Investing News

    Today's Sell-off: Are We in a Margin Liquidation?

    If we're in market liquidation, is it good news or bad news? That party depends on your timeframe.
RELATED FAQS
  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 >>
COMPANIES IN THIS ARTICLE
Trading Center