Under The Hood: A Farm Play

It seems like traders and investors can't turn on their TVs or read their financial news source of choice these days without hearing about food inflation. Simply put, rising food inflation is a major macroeconomic theme in 2011. Want to know what has been hampering Indian stocks and ETFs this year? Food inflation. What was the issue that touched off protests in North Africa? Arguably food inflation. Commodities inflation is often portrayed as a crime that victimizes many and to be sure, there are victims, but the evolution of the exchange traded products business has seen dozens of options become available to ordinary investors to not only protect against, but profit from rising commodities prices. Of course, playing commodities of any stripe, particularly agriculture commodities, can be risky and volatile when done through the futures market, so the question is why not use an ETF or ETN? Enter the Elements Rogers International Commodity Agriculture ETN

, today's under the hood candidate. RJA is an alluring prospect for the investor or trader that just cannot make up his or her mind about what ag commodity to get involved with. With everything from cotton to corn to cocoa and plenty of others all getting significant air time lately, focusing in on just one or two can be difficult, but RJA has you covered. RJA is one-stop shopping for the indecisive investor. The ETN features weights of 13.6% to corn and wheat, respectively, and a 12% weight to cotton. Coffee, cattle, cocoa and sugar can also be found among the ETN's top-10 holdings. RJA is also worth a look because it is one of a small amount, or perhaps the only exchange traded product that features exposure to rice and orange juice futures. The expense ratio of 0.75% is a tad rich, but that's par for the course in this genre of exchange traded products. RJA has decent liquidity at average daily volume of over 786,000 shares and the fund just touched a new 52-week at $11.81 on Thursday. The $12 area could prove to be psychological resistance, but the bottom line is commodities prices are going higher this year and RJA is an ideal to way to cover all of your farm exposure in one fund. The technicals and the fundamentals here are too compelling to ignore. Don't say we didn't warn you when RJA is trading at $15-$16.