Checking In: Investors Flocking To This Ag Play

For the longest time, well almost four years, it seemed like the Market Vectors Agribusiness ETF MOO was immune to legitimate competition when it came to equity-based ETFs tracking the global agribusiness boom. Sure, MOO has a couple of competitors, but none can come close to boasting the $5.6 billion in assets under management that the ETF has. So it might be fair to say MOO has the market cornered on large-cap focused agriculture ETFs and if that is true (it probably is), ETF issuer IndexIQ was wise to offer investors a small-cap approach to ag equities rather than another ETF that looks just like MOO. The approach seems to be working as the IQ Global Agribusiness Small Cap ETF CROP has accumulated $54.8 million in AUM since its March 22nd debut, a stellar total in less than four months of trading. In fact, that strong AUM total garnered by CROP puts the ETF among the upper echelon of ETFs offered by New York-based IndexIQ. The differences between CROP and MOO are significant because they have allowed CROP to flourish in the face of intense, well-established competition. MOO is the place to go for large-cap names like Deere DE, Mosaic MOS and Potash POT. CROP's title gives away the fact the those large-cap names aren't found among the ETF's 52 holdings. Tractor Supply TSCO, Vittera, Smithfield Foods SFD and a host of possible takeover targets make CROP an intriguing ag ETF. Bolstering the case for CROP is the fact that the ETF is up 4% since its March 22nd debut. That compares with a gain of just over 2% for MOO. And while MOO is focused more on farm equipment providers and crop nutrient producers, CROP has a little something for everybody as four sectors get double weights ranging from 16.8% (ag machinery) to 26.7% (crop production). Even biofuels exposure can be had with CROP as that sector accounts for nearly 10% of the fund's weight. CROP deserves credit on two levels: For being a stark and noteworthy alternative to MOO and for a solid performance during a market environment that has been unfavorable to high-beta fare for much of the ETF's short lifespan. The bottom line with CROP is that it is an ETF to consider for investors needing some ag exposure and it is shaping up to be one of the better new ETFs to come to market in 2011.