At first glance, the VanEck Vectors Agribusiness ETF (MOO) doesn’t appear to be an exchange traded fund with a strong technology profile or significant tech inroads, but further examination to that effect is warranted.
With that deeper examination, investors will discover that agriculture is increasingly an epicenter of technological advancement, and that theme is accessible via MOO. MOO, which tracks the MVIS Global Agribusiness Index, holds 53 stocks, and while few are considered tech names in the traditional sense of the term, some MOO components are more “techy” than meets the eye.
In fact, the coronavirus pandemic is speeding along the agriculture industry’s embrace of technology, and that’s expected to be a long-term theme.
“Even before the coronavirus pandemic hit in 2020, the agriculture industry was dealing with a number of headwinds, from hurricanes and poor planning disrupting crop growth cycles to the impact of retaliatory tariffs slashing exports,” reports Carmen Reinicke for CNBC. “When Covid hit, it highlighted existing issues and brought new ones, including supply and demand shocks to the food system and a labor shortage. Then, the invasion of Ukraine dealt another blow, roiling global grain markets.”
Between the pandemic and various supply chain issues, technology focus is growing in the agribusiness space, and some MOO components stand to benefit. Data confirm some professional investors are preparing for massive opportunity at the intersection of agribusiness and technology.
“Deals and venture capital investments in the space have ticked up since 2020. In that year, venture capital put $3.4 billion into 422 deals, double the $1.7 billion invested a year earlier, according to data from Crunchbase. In 2021, even more, money went into funding agriculture tech startups, with 440 deals and $4.9 billion,” according to CNBC.
Among the MOO components, analysts are bullish that also are positioned to benefit from tech growth in the agribusiness space are, in alphabetical order, Agco (NYSE: AGCO), Corteva (NASDAQ: CTVA), and Deere (NYSE: DE).
As the dominant domestic manufacturer of agriculture equipment, Deere makes for a sensible idea regarding leveraging the agriculture/tech theme. That stock is MOO’s largest holding at a weight of 8.75% as of Oct. 21. Corteva is the fund’s fourth-largest component at an allocation of 6.38%, while Agco accounts for 1.67% of the fund’s roster.
Bottom line: MOO could be the ideal option for investors looking to position for more agriculture/tech interfacing while removing the need for stock picking.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.