One of the most popular ways to invest is to find a theme or tailwind to benefit from. I'm a big fan of food related stocks because, in my mind, they're quite defensive. We all need to eat and most of the food shares on the ASX are decent opportunities.
But, just like technology companies, some of the best food-related businesses are actually trading on overseas-based stock exchanges.
Does that mean those companies are out of reach of an ASX investor?
Luckily, you can invest indirectly through an exchange-traded fund (ETF) called BetaShares Global Agriculture ETF (ASX: FOOD).
BetaShares run a variety of ETFs for investors to grab a piece of an investment theme or index.
The Global Agriculture ETF provides exposure to the largest global agricultural companies (excluding companies listed in Australia), hedged into Australian dollars.
I really like this investment theme because there is growing food scarcity in the world due to changing climates and a growing global population. Indeed, some areas of the world are losing potential farmable land as deserts expand in size, such as the Gobi Desert in China.
The FOOD ETF's top holdings include 9.3% in tractor company Deere & Co, 7.6% in Kubota Corp, 6.6% in Archer Daniels Midland, 6% in Tyson Foods Inc and 4.6% in WH Group Ltd.
BetaShares also provides information on what segments the companies operate in and in which country they are based. Around 37.1% of the ETF is allocated to packaged foods and meats, 18.3% is allocated to agricultural & farm machinery, 16.9% is allocated to agricultural products and 12.3% is allocated to fertilisers & agricultural chemicals.
On the country side of things, 46.7% of the holdings are in the United States of America, 14.3% are in Japan and 7% are in Britain.
Since inception on 2 August 2016 the fund has returned an average of 13.56% per annum, over the past year it has returned 9.54%. These returns are after the 0.57% management costs. The trailing 12-month distribution yield is 1.1%.
Foolish takeaway
I think this ETF is a very interesting idea and I'll likely add it to my portfolio this year. I am quite bullish on food businesses in general and I believe this index will deliver better returns that most other industries other than technology.
