The narrow nature of this fund drew some specific criticism from Michael Santoli in Barron's, who said this fund will "allow investors to play the whip-end of the agricultural-related commodity craze." As increasingly narrow funds continue to be issued, the question of whether funds like this one actually hurt people becomes reasonable.

Some estimates for the world's population show it growing to 9 billion by 2050. The world already has issues with not having enough food and water for today's population. In this context I believe the demand for more food and healthier diets is a one-way trade. This does not mean the stocks are a one-way trade, however. The theme will very likely outperform the broad market during the typical bull cycle, but it is very unlikely that agriculture stocks will offer any shelter during the next bear market. Stocks in this sector tend to be more volatile than the broad market and so it should not be a surprise if an agriculture ETF goes down 40% if the S&P 500 goes down 30%.

I think its crucial that investors understand how the stocks in the funds they own trade. Some market segments will be very volatile and some will have very little volatility. The agriculture theme is very important, and this makes the new fund compelling, but the agriculture theme is far from immune to normal stock market cycles. To expect otherwise is to not understand what you're buying.

At the time of publication, MOO was a holding for clients of Nusbaum.

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Roger Nusbaum is a portfolio manager with Your Source Financial of Phoenix, and the author of Random Roger's Big Picture Blog. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Nusbaum appreciates your feedback; click here to send him an email.

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