Great numbers from most of the fertilizer companies underscore the resilience of the agriculture sector in the face of economic fears and slowdown. If you ask me, I'm always for investing in ag stocks, simply because they run a business that will never go out of fashion. The growing population pushes demand for food and keeps farmers busy, in turn providing brisk business to companies that are into any kind of agribusiness.
I'm all the more bullish on fertilizer stocks after the U.S. Department of Agriculture's latest prediction of record corn plantations by U.S. farmers in 2012. If a bumper corn crop is around the corner, these companies might be in for great days ahead.
So how do you cash in on all this optimism? By buying agribusiness stocks, of course. But picking out the best stocks isn't easy. Buying shares of an agribusiness-based ETF would be a better and easier way to get exposure to some of the big players in one go, and, as I see it, the best one to consider is Market Vectors Agribusiness ETF
Market Vectors tracks the DAXglobal Agribusiness Index. The fund currently offers exposure to 46 companies, including the top agriculture players. It invests nearly 82% in large market-capitalization stocks. Region-wise, more than 84% is allocated to the developed markets (which include the developed nations in Asia) and the rest to emerging regions.
Here's a quick roundup of the top three holdings as of March 5:
The Foolish bottom line
The best part about Market Vectors is its expense ratio of 0.56%, which is lower than peers PowerShares Global Agriculture and PowerShares DB Agriculture. With the long-term agriculture story looking bullish, betting on this ag ETF could prove to be a smart move. The fund is up nearly 7% since Jan. 1, but has fallen back recently. I see any dip as a good opportunity to add some nourishment to your portfolio. Let me know what you think by adding your comments below.
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Fool contributor Neha Chamaria does not own shares of any of the companies mentioned in this article. Motley Fool newsletter services have recommended creating a synthetic long position in Monsanto. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.