Another Day, Another Big Acquisition ...

July 08, 2014

Two deals this week as seen through related ETFs.

MOO & PEJ 1 Year Total Return

Monday saw the announcement of two acquisitions.

Archer Daniels Midland, the food and agriculture behemoth, plans to buy Swiss-based Wild Flavors—a company specializing in flavors and coloring for healthy eating. Meanwhile, Expedia announced plans to acquire Wotif.com, an Australian travel site.

Each of these acquisitions brings about an interesting ETF play.

Archer Daniels Midland earns a large allocation in the Market Vectors Agribusiness ETF (MOO | C-60). MOO holds a market-cap-weighted portfolio of companies that generate more than 50 percent of revenues in the agribusiness sector.

For an expense ratio of 0.55 percent, investors get access to a portfolio of more than 50 agricultural companies including Deere & Monsanto. MOO is also tremendously liquid, as it sees more than $10 million in volume most days and trades at narrow spreads.

The Expedia merger also produces an interesting play for thematic investors. The PowerShares Dynamic Leisure and Entertainment ETF (PEJ | B-18) charges a hefty 0.63 percent expense ratio for a portfolio of 30 companies in the leisure and entertainment space.

The ETF is a one-stop shop for investors betting on increased leisure spending from U.S. consumers. It's the only ETF specifically targeting "leisure," but there are plenty of ETFs offering broader exposure to U.S. Consumer Cyclicals—many of which charge lower fees and are more liquid than PEJ.

 

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