KB Asset Management Launches Industry-First ETF Investing in Global Agriculture-Related Companies

[Asia Economy Reporter Hwang Yoon-joo] KB Asset Management is launching the industry’s first ‘KBSTAR Global Agricultural Economy MV ETF,’ which invests in key global companies related to agriculture.

The ‘KBSTAR Global Agricultural Economy MV ETF,’ which tracks the Global Agricultural Economy Index, is an ETF that invests in key global companies across the entire agricultural value chain, including seed and food production companies, fertilizer and chemical product manufacturers, as well as agricultural machinery manufacturing, distribution, and processing companies.

It consists of companies with more than 50% of their revenue related to agriculture, investing in Deere, the global leader in agricultural machinery market share (7.49%), Zoetis, the world’s number one animal pharmaceutical company (9.58%), Bayer, a developer and producer of pesticides and seeds (7.0%), Nutrien, the world’s largest potassium fertilizer company (6.27%), and Corteva, a pesticide manufacturer (5.79%), among others.

The country allocation is 52% United States, 8% Germany, 6% Canada, and 5% Norway, in that order.

Due to global abnormal weather patterns and the Russia-Ukraine war, the agflation situation, where grain and meat prices are soaring, continues, leading to very high interest in agricultural product investments.

There are two main ways for individual investors to invest in agricultural products. First, directly investing in agricultural futures ETFs that show price movements most similar to agricultural product prices. While these ETFs closely track agricultural product prices, they incur futures rollover costs, which can cause divergence from agricultural product price increases in long-term investments.

Second, investing in agriculture-related companies that benefit when grain prices rise, such as with the KBSTAR Global Agricultural Economy MV ETF. Just as oil-related company stock prices rise when oil prices increase, agriculture-related companies also show a close correlation with agricultural product prices. Many key agriculture-related companies have pricing power, so their performance improves when agricultural product prices rise. A particular advantage is that, as a product investing directly in stocks, it can also be invested in through pension savings accounts and retirement pension accounts.

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