BlackRock has launched a new thematic equity ETF in the US providing global exposure to leaders in food-related technology.
The ETF provides exposure to companies revolutionizing the global food industry.
The iShares Emergent Food and AgTech Multisector ETF (IVEG US) covers a diverse range of food technology companies working to optimize human diets, production practices, safety measures, and sustainable packaging.
According to BlackRock, the strategy captures firms well-placed to benefit from the global challenge of providing healthy, affordable, and nutritious food to a growing population.
The fund may also fit within a socially responsible portfolio as it invests in firms that are ultimately helping to reduce environmental harm by developing a sustainable food supply chain.
The ETF has been listed on Nasdaq with an expense ratio of 0.47%.
Methodology
The ETF tracks the Morningstar Global Food Innovation Index which selects its constituents from a universe of stocks from developed and emerging markets, excluding India. To be eligible for inclusion, a company must have a market capitalization above $300 million and an average daily trading volume greater than $2m.
Morningstar’s Global Equity Research team assigns each company in the universe four thematic relevance scores, each related to a specific food-related sub-theme: Alternative Proteins, Agriculture Technology, Sustainable Food Production & Packaging, and Nutritional Innovation & Safety.
The scores, which may be either 0, 1, 2, 3, or 4 represent a forward-looking assessment of the potential for a firm to derive significant economic benefits from that sub-theme, reflected by the percentage of total company revenue that is estimated to be derived from that sub-theme in five years.
The index targets a minimum of 50 stocks, selecting constituents based on a ranking system that favours firms with higher aggregate scores (the sum of thematic scores across sub-themes) as well as companies with thematic scores of 3 or 4 in one or more sub-themes.
Constituents are weighted by float-adjusted market capitalization subject to an individual stock cap of 4%. The index is reconstituted and rebalanced annually in December with buffer rules helping to limit unnecessary turnover.
As of 25 April, nearly three-quarters of the index weight was allocated to US-listed stocks with the next-largest country exposures being Germany (9.9%), Norway (6.3%), Canada (5.1%), France (3.7%), and the UK (3.4%).
Stocks from the materials sector dominated, accounting for half (50.8%) of the total exposure with the index also demonstrating significant allocations to stocks from the consumer staples (22.9%) and industrials (15.6%) sectors.
Notable positions included Mosaic (6.7%), Archer Daniels Midland (5.4%), Nutrien (5.2%), Bayer (5.0%), and Corteva (4.7%).
The fund is at least the third ETF targeting the food technology theme. Other ETFs in the space include the Global X AgTech & Food Innovation ETF (KROP US), which comes with an expense ratio of 0.50%, and the actively managed VanEck Future of Food ETF (YUMY US), which costs 0.69%. Neither ETF has yet to accumulate any significant assets.