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Meet the Organics ETF — or Should It Be Called the Whole Foods ETF?

Jon C. Ogg

You have probably heard over the years that there is an exchange traded fund (ETF) strategy for just about every sector and theme you can imagine. Now you can add the thematic approach of organic foods to that list of endless ETFs. The Organics ETF (ORG) has now launched from the thematic investing team at Janus.

What is so interesting here is that the theme of organic foods has risen in recent years, but the list of companies has become quite crowded. Another consideration is that maybe it should be called the Whole Foods ETF, as Whole Foods Market Inc. (WFM) has a weighting of 22.92% of the entire ETF. As you will see in the holdings below, that is over four times larger of any weighting of the other components. There are also 24 holdings that make up the ETF.

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The Organics ETF aims to track the investment results that correspond to the performance of the Solactive Organics Index. Its annual expense ratio is 0.50%.

Janus said that organic food sales rose to over $39 billion in 2014, a 10-fold increase in demand over the past 17 years. The launch page for Janus said:

The Organics ETF seeks exposure to companies globally that can capitalize on our increasing desire for naturally-derived food and personal care items, including: companies which service, produce, distribute, market or sell organic food, beverage, cosmetics, supplements, or packaging.

Note that this list of companies includes many unknown companies that trade outside of the United States. Below is the weighting of each company, as of June 8, 2016:

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  • Whole Foods Market, 22.92%
  • United Natural Foods Inc. (UNFI), 5.16%
  • Hain Celestial Group Inc. (HAIN), 5.10%
  • WhiteWave Foods Co. (WWAV), 4.95%
  • Ariake Japan, 4.60%
  • Rock Field, 4.51%
  • Chr Hansen, 4.43%
  • L'Occitane International, 4.37%
  • Bellamy's Australia, 4.37%
  • Wessanen, 4.36%
  • China Shengmu Organic Milk, 3.94%
  • Blackmores, 3.79%
  • SunOpta, 3.66%
  • Sprouts Farmers Market Inc. (SFM), 3.65%
  • Freedom Foods Group, 2.91%
  • Nutraceutical International, 2.81%
  • Village Super Market, 2.75%
  • Natural Grocers by Vitamin Cottage, 2.54%
  • Amira Nature Foods, 2.12%
  • Century Sunshine Group Holdings, 1.62%
  • Sino Agro Food, 1.56%
  • DavidsTea Inc. (DTEA), 1.56%
  • Ichitan Group, 1.41%
  • Naturhouse Health, 0.91%

According to Janus, there are now more than 19,500 organic farming operations in the United States. This is helping to meet what is an expected 16% annual gain in demand globally for organic food through 2020. Nick Cherney, Senior Vice President and Head of Exchange Traded Products for Janus Capital Group, said:

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Changes in demographics and lifestyle are altering the investment landscape. These thematic Exchange Traded Funds are designed to capitalize on those shifts to give advisors new tools that can help clients achieve better financial outcomes.

The Organics ETF comes with a net annual fee of 0.50%.

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