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March 24, 2011 at 12:59 PM
With the risk of global food shortages apparently growing by the day, commodities investors in the exchange traded fund (ETF) market are looking to sink their teeth into what they see as growing agribusiness opportunities.
On Tuesday, IndexIQ launched its IQ Global Agribusiness Small Cap ETF (CROP) and saw volume in excess of 200,000 shares in its first day of trading. By midafternoon Thursday, volume stood at 324,455, according to Morningstar.
Index data provided by Rye Brook, N.Y.-based IndexIQ show 52 individual holdings in CROP, which has a weighted average market capitalization of $2.39 billion and an expense ratio of 0.75%.
IndexIQ Chief Executive Adam Patti (left) said CROP will provide exposure to global small-capitalization companies engaged in the growing agribusiness sector. Because it is an ETF, Patti said, CROP will give investors “a highly liquid, highly transparent, low cost, tax efficient” way to gain exposure to agribusiness’ growing demand for food crops and shrinking supply of them.
“Global supply shortages, changing dietary demands in emerging markets, growing populations and alternative energy production are among the many powerful factors driving global demand and skyrocketing prices for agribusiness products. We believe these trends are likely to persist for the foreseeable future,” Patti said in a statement.
