ETFs to buy food stocks.
There’s money in food — trillions of dollars are spent globally on food and beverages every year, from dividend-generating processing multinationals to quick-growing organic producers to even the agricultural companies that make it all possible. And you can invest across various links in the chain via these nine exchange-traded funds.
First Trust Nasdaq Food & Beverage ETF (FTXG)
It’s hard to get a more direct play on food and beverage than … well, the Food & Beverage ETF. This is a who’s who of the processed food and beverage industry, featuring broad players such as PepsiCo (PEP) and Mondelez International (MDLZ), beverage companies like Coca-Cola Co. (KO) and even alcohol players like Constellation Brands (STZ), which owns the Robert Mondavi wine, Corona beer and Svedka vodka brands, among others. This is a tight and concentrated portfolio, however, with five of FTXG’s 29 holdings — including PEP, KO and MDLZ — making up nearly 40 percent of the fund.
Expenses: 0.6 percent, or $60 annually for every $10,000 invested
PowerShares Dynamic Food & Beverage Portfolio (PBJ)
Like FTXG, the PBJ ETF is a direct play on food, though it’s a much more balanced fund. The top five holdings — including food products distributor Sysco Corp. (SYY), as well as MDLZ and Kraft Heinz Co. (KHC) — make up just about a quarter of the fund, and all holdings account for no more than 5.27 percent and no less than 2.43 percent of the fund currently. PBJ also has an odd bent in that it holds a pair of consumer discretionary stocks — pizza restaurants Papa John’s International (PZZA) and Domino’s Pizza (DPZ) — at around 3 percent each.
Expenses: 0.58 percent
Consumer Staples Select Sector SPDR Fund (XLP)
The XLP, at nearly $1 billion in assets, is the largest fund that invests in consumer staples — companies that produce or sell “essential” products. Nearly a quarter of the fund is in food/staples retailers, such as Wal-Mart Stores (WMT), and about 40 percent of the fund is in food or beverage companies like PEP and KO. But this isn’t a pure-play food fund. XLP also offers exposure to consumer goods companies like Procter & Gamble Co. (PG), owner of Crest, Charmin and other brands, and even tobacco companies like Philip Morris International (PM).
Expenses: 0.14 percent
SPDR S&P International Consumer Staples Sector ETF (IPS)
IPS is an international version of XLP that has slightly less weight in food and staples retailers, but a little more weight overall across food and beverage producers. Geographically, companies located in the United Kingdom (23 percent), Japan (20 percent) and Switzerland (14 percent) dominate the fund, but like XLP, many of its top holdings — such as Nestle SA and Unilever NV (UL) — are multinationals that get their revenues from across the globe. Also of note: Three of IPS’ top five holdings are “sin” stocks — British American Tobacco, Anheuser-Busch InBev (BUD) and Diageo (DEO).
Expenses: 0.4 percent
PowerShares Global Agriculture Portfolio (PAGG)
PowerShares’ PAGG is another way to approach food investing in that it not only invests in food producers, but also companies that are tied to agriculture and farming. What you get is a portfolio of companies across the agrifoods spectrum. So on one end, you have seeds and chemical companies like Monsanto Co. (MON) and Potash Corp of Saskatchewan (POT). On the other hand, you have pure-play produce companies like Fresh Del Monte Produce (FDP). And in the middle, you have companies like Archer Daniels Midland Co. (ADM), which produces everything from oils to chocolate, but also trades and transports commodities.
Expenses: 0.76 percent
VanEck Vectors Agribusiness ETF (MOO)
The MOO ETF is a similar fund that focuses on agriculture, though it stretches a bit farther afield. PAGG is invested in about 55 percent materials and 45 percent consumer staples. MOO still holds plenty of both, including agrochemicals and seeds firm Syngenta (SYT) and chicken giant Tyson Foods (TSN), but the breakdown is about 38 percent materials and 32 percent staples. Most of the rest are spread to industrials (18 percent) like tractor specialist Deere & Co. (DE), as well as health care companies (10 percent) like Idexx Laboratories (IDXX), whose products and services are targeted at things like veterinary sciences and milk testing.
Expenses: 0.55 percent
PowerShares DB Agriculture Fund (DBA)
Rather than putting money in the shares of companies dealing with food, investors also can invest more directly in agricultural products themselves via the DBA. The DBA tracks an index of widely traded agricultural futures, the vast majority of which are dedicated to food. Live cattle, soybeans, wheat, corn, sugar, cocoa and coffee all have double-digit weightings in this fund, while the fund also has some exposure to lean hogs (8.5 percent) and feeder cattle (4.5 percent). The only non-food holding in DBA is cotton, whose futures make up just 3 percent of the fund.
Expenses: 0.89 percent
ETRACS CMCI Food Total Return ETN (FUD)
Whereas the DBA actually holds a number of commodities futures, the FUD is actually an exchange-traded note, or ETN. Basically, an ETN is bank debt wrapped up to simply pay the returns of an index — in this case, an index of 11 different commodities-based futures. FUD holds soybeans, soybean meal and soybean oil at a combined 30 percent or so, and two types of sugars at about 50 percent. Corn is another 15 percent, three types of wheat futures make up another 12 percent, and the rest of the fund is split among live cattle, lean hogs, cotton and coffee. FUD came to life in 2008 and outperformed DBA in its first few years of trading, but has lagged since 2013.
Expenses: 0.65 percent
Global X Health & Wellness Thematic ETF (BFIT)
The last fund on this list has a significant — though a minority — weighting toward food as part of a broader investment strategy “in companies geared toward promoting physical activity and well-being.” In all, BFIT is about 20 percent invested in packaged foods and meats companies like organic-focused WhiteWave Foods Co. (WWAV) and French dairy and general nutrition multinational Danone SA, with another 5 percent in retailers like Whole Foods Market (WFM). Past that, though, you’re investing in a lot of apparel, footwear, health care equipment and personal care companies.
Expenses: 0.68 percent
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9 Food-Focused ETFs to Feed Your Portfolio originally appeared on usnews.com
