First Trust Exchange-Traded Fund II First Trust Indxx Global Agriculture ETF (FTAG) seeks to track the Indxx Global Agriculture Index, which measures the performance of companies worldwide engaged in agricultural production, equipment manufacturing, fertilizers, seeds, and food processing. This international equity ETF provides exposure to the global agriculture value chain across developed and emerging markets.
How It Works
FTAG uses a passively managed, modified market-capitalization-weighted approach that mirrors its benchmark index. The fund holds stocks of companies deriving significant revenue from agricultural activities, including crop production, livestock, farm equipment, agricultural chemicals, and food processing. Holdings are weighted by market cap with adjustments for liquidity and investability. The ETF rebalances quarterly to maintain alignment with index changes and typically holds 40-60 global agriculture-related companies.
Key Features
- Provides targeted exposure to global agriculture sector often underrepresented in broad market ETFs
- Includes entire agriculture value chain from farm-to-fork, not just commodity producers or farmland
- International diversification across developed and emerging markets reduces single-country agricultural policy risks
Risks
- This ETF can lose value when commodity prices decline, as agricultural companies' profits depend heavily on crop and livestock pricing cycles
- Weather events, droughts, or climate change can severely impact agricultural production and company revenues across multiple holdings simultaneously
- Sector concentration risk means the fund lacks diversification, potentially declining 40-50% during agricultural downturns while broader markets remain stable
Who Should Own This
Best suited as a satellite holding (5-10% of portfolio) for investors with 3+ year time horizons seeking agricultural sector exposure or inflation hedging. High risk tolerance required due to commodity volatility and sector concentration. Appropriate for tactical allocation during commodity supercycles or as portfolio diversifier alongside traditional equity holdings.