Rabobank Introduces Equity Indices Linked to Food, Agriculture

By Feiwen Rong

July 16 (Bloomberg) -- Rabobank International, a unit of Rabobank Group, introduced two equity indices to tap investor interest in food and agriculture at a time when underlying commodities may not repeat the returns of the past two years.

Each of the Rabobank Fastracks Indices, one global and one Asia Pacific, consists of 20 agriculture companies from fertilizer makers to machinery manufacturers, the company said today in a statement. The index members have been weighted according to their relative importance in the business cycle, liquidity and market capitalization, it said.

``Agriculture, more than any other business, is cyclical,'' Brady Sidwell, analyst at Rabobank, said today at a press conference. ``We are not saying things will top and fall but the boom we've seen in the past 18-24 months, that type of growth, is not going to continue.''

Investors worldwide are buying commodity-linked indexes and futures, seeking to beat stock and bond returns as concern about raw material shortages push oil and corn to records. Within commodities, the Rogers International Commodity Agriculture Index returned a total of 40 percent in the past two years.

Rabobank identified five food and agriculture sectors: protein, food processing, energy crops, agriculture inputs and machinery and equipment. The indices will be rebalanced every six months or one year reflecting the bank's outlook.

The indices will help investors sidestep growing government anxiety about speculation in commodities markets, Sidwell said.

Top Five Holdings in Rabobank's Fastracks Global Composition
Monsanto Co.
Potash Corp. of Saskatchewan
Mosaic Co.
Archer-Daniels-Midland Co.
Terra Industries Inc.

Top Five Holdings in Rabobank's Fastracks Asia-Pacific
Composition
Nufarm Ltd.
Sinofert Holdings Ltd.
China Bluechemical Ltd.
Nissin Food Products Co.
Kikkoman Corp.

To contact the reporters on this story: Feiwen Rong in Singapore at frong2@bloomberg.net