Under The Hood: Get Dirty With This Fertilizer ETF

For several years, the Market Vectors Agribusiness ETF MOO was the lone wolf when it came to equity-based ETFs tracking the agriculture sector. That position has helped the ETF amass over $5.6 billion in assets under management. That's a lofty number to get to, but that doesn't mean other ETF issuers aren't looking to encroach on MOO's territory. In fact, they are as the number of new agribusiness ETFs has gradually started to increase over the past couple of years. Knowing that MOO has a dominant market position and brand recognition among investors, smart ETF sponsors have to offer something unique when it comes to new agriculture equity ETFs. There are few recent examples of this and one of the better ones is the newly minted Global X Fertilizers/Potash ETF SOIL. The Global X Fertilizers/Potash ETF made its debut in late May and running into the buzz-saw of the risk on trade being turned off, the ETF has done a stellar job of attracting assets under management with nearly $36 million. As its name indicates, SOIL focuses solely on fertilizer producers, something MOO does not do. That makes SOIL the first pure play potash fund out there. CF Industries CF, Agrium AGU, Potash Corp. POT and Mosaic MOS are among the ETF's top holdings that are widely known to investors. That group represents four of SOIL's 29 holdings. In terms of geography, four countries (the U.S., Israel, Canada and Australia) account for about 56% of the ETF's weight. Those are some of the particulars on SOIL, but what might make this ETF just as good as, if not a better idea than MOO going forward? The same reason why it's an interesting fund right now: Pure play on potash. Asian and Latin American emerging markets account for nearly two-thirds of global crop nutrient consumption and fertilizer consumption is growing fastest in these emerging markets, with historical annual growth rates of more than 3% over the past 15 years, according to Potash Corp. Something else to consider: SOIL is basically a commodities ETF. Demand for crop nutrients is expected to outpace supply over the next several decades. And that's very good news for fertilizer bulls indeed.