For generations, investing in food meant tapping consumer staples stocks and, more recently, exchange traded funds.
The sector, which includes much more than food and beverages, isn’t necessarily exciting, but it’s known for below-average volatility and above-average dividends — traits many investors crave. For hungry investors who want a more futuristic view of food investing, the VanEck Future of Food ETF (YUMY ) answers the call.
YUMY, which debuted last November, does include some consumer staples companies. In fact, that’s the ETF’s largest sector exposure at 41.6%. However, YUMY lives up to its name by taking a futuristic, holistic approach to food investing that’s relevant at a time when consumers and investors are prioritizing healthy living and environmental awareness.
Looked at differently, the future of food from an investment perspective is bright, but investors need the right vehicle to capitalize on that positive outlook.
“The ‘Future of Food’ thus represents the market segment of participants central to this transformation,” wrote Andrew Musgraves, VanEck senior product manager. “These market participants include emerging leaders in areas such as food technology, precision agriculture and agricultural sustainability, which are often overlooked and underrepresented in terms of overall market capitalization relative to the more traditional fertilizer and farm equipment manufacturers, grain and meat producers, food suppliers and packagers.”
Beyond those points, a strong case can be made that YUMY is at the right place at the right time because agriculture is taking an increasingly prominent role in not only delivering healthier dining options, but in improving sustainability as well. The actively managed YUMY is at the center of both of those themes.
“Agricultural sustainability can be viewed as an area addressing all of the by-products of the processes involved in getting food from pre-growth to end-use (in most cases, human consumption). This can include things such as the manufacturing of organic or non-toxic crop chemicals and fertilizers to the development of biodegradable or recycled food packaging,” added Musgraves.
To the point about YUMY being actively managed, that carries several potential benefits, including the fund’s ability to stand out from run-of-the-mill fare in this category. With standard funds in this group, “there is little value added beyond the agricultural commodity itself, and thus these companies tend to be more sensitive to the prices of the underlying commodities relative to companies operating in the food technology, precision agriculture or agricultural sustainability segments,” concluded Musgraves.
For more news, information, and strategy, visit the Beyond Basic Beta Channel.
