The years 2007 and 2008 saw the start to an increase in agriculture prices, which have since stabilized. Some analysts believe that the spike during those two years means that higher agricultural prices are on the horizon. This makes now a good time to invest in agricultural exchange traded funds, or ETFs.
Market Vectors Agribusiness invests in firms that supply materials, equipment, and services to agricultural producers. There are 44 companies within this fund, including the seed giant Monsanto, equipment manufacturer Deere & Company and Potash Corp. fertilizer company. The fund has a 45 percent concentration of U.S.-based companies, but most of these are multinational entities that have global revenues.
PowerShares Global Agriculture Portfolio invests in many of the same companies as Market Vectors Agribusiness. However, its weighting formula is more disbursed in favor of international companies. There are not as many machinery and equipment companies contained within this fund. PowerShares Global Agriculture has a higher expense ratio and lower volume than the Market Vectors fund.
There are also overseas agricultural ETFs and these are especially concentrated in England. London-based ETF Securities offers ETFs for almost every commodity listed on the London exchange. U.S. investors should look at the PowerShares DB Agriculture Fund if they would like to invest in the commodities market. This fund contains futures holdings of 25 percent each in corn, wheat, soybeans, and sugar. The PowerShares DB Agriculture Fund is not only the oldest, it is also the most widely traded, U.S. agriculture ETF.
There are currently a total of nine agricultural ETFs and exchange traded notes (ETNs) within the U.S. from which investors can select. Agriculture investments are predicted to increase in the future in order to support increased levels of demand. Making an investment now before share prices begin to climb further represents a wise move.
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Agriculture Stocks
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