Global Agricultural Company Investment Also in 'KBSTAR ETF'

[Asia Economy Reporter Junho Hwang] An exchange-traded fund (ETF) investing in global core agricultural companies is being launched. It is expected to become a new alternative for investors who have invested in agricultural commodity futures ETFs despite rollover costs.

KB Asset Management announced on the 26th that it will launch the 'KBSTAR Global Agriculture Economy MV ETF.' This ETF tracks the global agriculture economy index, which consists of companies with more than 50% of their revenue related to agriculture. These include seed and food production companies, fertilizer and chemical product manufacturers, and agricultural machinery manufacturing, distribution, and processing companies.

Specifically, it includes Deere, the global leader in agricultural machinery market share (7.49%), Zoetis, the world's top animal pharmaceutical company (9.58%), Bayer, a seed development and production company (7.0%), Nutrien, the world's largest potassium fertilizer company (6.27%), and Corteva, a pesticide manufacturer (5.79%). The country allocation is divided as follows: United States 52%, Germany 8%, Canada 6%, Norway 5%, among others.

This ETF is expected to be a new investment alternative for domestic investors who have previously invested in agricultural commodity futures ETFs. In particular, it has the advantage of being investable through pension savings and retirement pension accounts.

Recently, due to the rise in agricultural commodity prices, demand for investment in domestically listed agricultural commodity futures ETFs has increased. However, these products incur futures rollover costs, which is considered a disadvantage as it may cause a divergence from agricultural commodity price increases during long-term investments.

Geum Jeongseop, Head of ETF Marketing at KB Asset Management, explained, "The high prices of agricultural commodities are likely to continue for the time being, and even if prices stabilize over time, interest and investment in agriculture will inevitably continue due to changing awareness of food self-sufficiency. Now, when the global stock market is showing a correction, it is rather an opportunity to invest in agriculture-related companies."

This content was produced with the assistance of AI translation services.