BetaShares Global Agriculture Companies ETF (ASX: FOOD) is an option to get exposure to an interesting global sector. Should you take a bite?
What is the FOOD ETF?
The businesses in this portfolio are among the largest global companies (excluding Australia) that are involved in agriculture and farming-related activities.
In terms of the types of businesses involved, we’re talking fertilisers and agricultural chemicals, packaged foods and meats, agricultural and farm machinery, agricultural products and trading companies & distributors.
Just over half of the portfolio is invested in US shares, but there’s good diversification to other countries, with 11.3% allocated to Japan, 9.6% allocated to Canada, 4.3% allocated to Norway, 4.2% allocated to the UK, 4.2% weighted to Germany and so on.
It has an annual management fee of 0.57%.
What are some of the holdings in the portfolio?
There are a total of around 60 businesses in the portfolio. Most of the companies in the top 10 are not exactly household names. You may know one or two of them: Nutrien, Deere & Co, Corteva, Archer Daniels Midland, Kubota, Tyson Foods, Brenntag, Marubeni, FMC and Hormel Foods.
Why would this ETF be a good one to consider?
BetaShares says that growing populations and rising global living standards support increasing strong demand for agricultural products, in both food and food production.
Developing countries are likely to see rising demand for food in the coming years in-particular. Climate change could also cause major problems for food production in a number of areas, particularly for farmland.
Just look at the difficulties that eastern and south eastern Australia has experienced during the droughts in the last few years. That may have improved the last 12 months (from what I’ve seen in the news). Droughts and tough growing conditions could happen in other places in the world.
We all need to eat food, so it’s not as though food demand can suddenly disappear. Food inflation could be a helpful factor for the underlying companies involved.
However, I wouldn’t expect the strongest of returns from this ETF either, it isn’t going to see revenue growth like a typical tech share.
