Breaking News
Ad-Free Version. Upgrade your experience. Save up to 40% More details

3 Food And Beverage ETPs To Add Spice To Long-Term Portfolios

By (Tezcan Gecgil/ )Stock MarketsSep 18, 2020 13:25
3 Food And Beverage ETPs To Add Spice To Long-Term Portfolios
By (Tezcan Gecgil/ )   |  Sep 18, 2020 13:25
Saved. See Saved Items.
This article has already been saved in your Saved Items

While the northern hemisphere prepares to welcome fall, cold weather combined with the global impact of coronavirus means that there will be more people staying indoors in the coming months. In turn, we can expect increased cooking and eating at home. Because eating and drinking are such integral parts of our lives and economies, they can make attractive long-term investments.

According to a report by the United States Department of Agriculture in February 2020, in 2018, agriculture, food, and related industries in the US created around 22 million jobs (about 11% of employment). These industries also contributed to 5.2% of the country's gross domestic product.

Investing in stocks or exchange-traded products (ETPs) in these industries may well add spice to long-term portfolios. Below are three ETPs providing exposure to the agricultural, food and beverage industries:

1. Invesco Dynamic Food & Beverage ETF

  • Current Price: $32.77
  • 52 Week Range: $24.44-$35.45
  • Dividend Yield: 1.25%
  • Expense Ratio: 0.65%

Invesco Dynamic Food & Beverage ETF (NYSE:PBJ) is composed of US food industry stocks, including 32 companies. PBJ tracks the equal-weighted Dynamic Food & Beverage Intellidex index.

PBJ Daily
PBJ Daily

The most important sectors (by weighting) are Food Processing (50.3%), Restaurant and Bars (17.68%) and Food Retail & Distribution (15.41%).

The top five holdings make up slightly over 25% of total net assets, which stand at $80 million. They include Brown Forman (NYSE:BFb), Mondelez International (NASDAQ:MDLZ), Monster Beverage (NASDAQ:MNST), PepsiCo (NASDAQ:PEP) and Hershey (NYSE:HSY).

Year-to-date (YTD), the fund is down about 5%. But the comeback since the 52-week low hit in mid-March has been impressive. As a result, the fund's valuation has also become rich. The trailing P/E and P/B ratios are 44.79 and 2.97, respectively. We'd ideally wait for a potential pullback toward the $30-level before investing for the long-run.

2. iShares MSCI Global Agriculture Producers ETF

  • Current Price: $29.36
  • 52 Week Range: $18.36-$29.38
  • Dividend Yield: 2.63%
  • Expense Ratio: 0.39%

The iShares MSCI Global Agriculture Producers ETF (NYSE:VEGI) provides exposure to a range of US and global agricultural businesses. These firms produce fertilizers and agricultural chemicals, farm machinery as well as packaged foods and meats.

VEGI Daily
VEGI Daily

The fund, which includes 136 companies, follows the MSCI ACWI Select Agriculture Producers Investable Market index. The top five holdings make up over 40% of its total net assets, which are close $28 million. They are Deere (NYSE:DE), Archer-Daniels-Midland Company (NYSE:ADM), Nutrien (NYSE:NTR), Corteva (NYSE:CTVA) and Kubota (T:6326).

YTD, the VEGI is up about 1%. In fact, on Sept. 16, it hit a 52-week high. Since early spring, VEGI is up over 90%. As a result, the trailing P/E ratio of 19.26 and P/B ratio of 1.85 are a bit on the expensive side. Any potential decline toward the $27.5 level would improve the margin of safety. Long-term, we're bullish on the sectors represented in the fund.

3. UBS ETRACS CMCI Food Total Return ETN

  • Current Price: $15.65
  • 52 Week Range: $13.63-$16.79
  • Expense Ratio: 0.50%

Our final exchange-traded product is an exchange-traded note (ETN). The ETRACS CMCI Food Total Return ETN (NYSE:FUD) provides exposure to a portfolio of commodity futures, an unsecured debt security issued by a financial institution, such as UBS (NYSE:UBS). Therefore, investors do not buy shares, but rather hold a bond-like certificate indicating the debt of UBS to the holder of the note.

FUD Daily
FUD Daily

There are currently 11 futures contracts from the agricultural and livestock sectors. These commodity futures contracts vary across up to three constant maturities from three months up to one year.

FUD follows the UBS Bloomberg CMCI Food USD TR index, created in 2007. The top four commodities comprise over 55% of the ETN. They are Soybeans (19.62%), Sugar #11 (15.01%), Corn (14.69%) and Live Cattle (7.80%).

So far in the year, FUD is down around 6%. In fact, since 2010, the longer-term trend has been down. However, since the all-time low hit in March, the ETN is up around 15%.

Those investors interested in investing in agricultural and livestock commodities may want to study FUD more as well as pay attention factors influencing the industry. One good resource is the U.S. Department of Agriculture's monthly World Agricultural Supply and Demand Estimates (WASDE) Reports

The weather plays a significant role in grain prices. The trade war rhetoric between the US and China potential also had an impact on US agricultural exports. Longer-term demand for most of these commodities will possibly grow because of demographics, i.e., feeding an increasing global population.

3 Food And Beverage ETPs To Add Spice To Long-Term Portfolios

Related Articles

3 Food And Beverage ETPs To Add Spice To Long-Term Portfolios

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email