Global X introduced a new ETF targeting the global food industry on May 3, and said it will donate all profits to help fight world hunger. The Global X Food ETF (EATX) tracks the Solactive Global Food Index, consisting of the 50 largest global firms with significant business operations in the food industry.
The index targets companies that derive the majority of their revenue from the production, development, or distribution of food or food ingredients. Stock weightings are determined by free float capitalization, but to ensure diversification, positions are capped at 4.75% at each 6-month rebalancing.
There are seven stocks limited by the 4.75% cap as of the last rebalancing: Brasil Foods S.A. (BRFS), Danone (DANOY), General Mills Inc. (GIS), HJ Heinz Co. (HNZ), Kellogg Co. (K), Kraft Foods Inc. (KFT), and Nestle (NSRGY).
Seventeen countries are represented in the fund with the U.S. at 48.3%, China 8.4%, Switzerland 8.1%, Japan 6.7%, U.K. 5.4%, Canada 5.2%, France 4.9%, and 10 others totaling 13.0%.
Although there are many ETFs focusing on food, agriculture, and related commodities, there are none that isolates the global food industry in the manner that EATX does. Its closest competitor is likely to be PowerShares Dynamic Food & Beverage (PBJ), although there are significant differences between the two. PBJ includes companies focusing on beverages and retail food sales, while limiting its holdings to just U.S. companies.
Global X Management Company, LLC, the fund adviser, will donate any profit it derives from EATX to Action Against Hunger | ACF International, a global humanitarian organization that works to save the lives of malnourished children while providing communities with sustainable access to safe water and long-term solutions to hunger.
EATX has an expense ratio of 0.65% and additional information is located in the press release (pdf), summary page, fact sheet (pdf), and prospectus (pdf).
Disclosure covering writer, editor, and publisher: No positions in any of the securities mentioned. No positions in any of the companies or ETF sponsors mentioned. No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.
By Ron Rowland