Van Eck's MOO: the right place at the right time.

Cover Story

When it comes to successfully launching a new product, timing is a critical factor. Throw in a solid sales and marketing strategy with great execution, and companies have a hit on their hands.

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That is exactly what has happened to the New York-based investment management firm Van Eck Global (www.vaneck.com) and its Market Vectors--Agribusiness ETF (ExchangeTraded Fund) that is traded on the American Exchange under the symbol: MOO.

Since its introduction last September, MOO has attracted over $1 billion in assets and is ranked among me most successful ETF launches in Van Eck and market history. The fact that its holdings are composed of companies that are a major part of this magazine's audience makes it a particularly interesting case history to present.

As anyone who has been following the agricultural industry knows, ag was one of Wall Street's darlings last year with the index MOO seeks to replicate finishing 2007 with a gain of approximately 90%. Through February 22, with the S&P 500 down approximately 7.85% year-to-date, the ag market as measured by the index underlying MOO is up slightly.

ABOUT THE PRODUCT

Generally speaking, an ETF is a fund that seeks to track the performance of a specified index such as the Dow Jones Industrial Average or the S&P 500 Index. In this case, MOO seeks to track the performance of the DAX-global Agribusiness Index (Bloomberg and Reuters ticker: DXAG) that was developed by Deutsche Bourse, the Frankfurt, Germany, stock exchange, and went live in July 2007.

"Our Market Vectors--Agribusiness ETF is currently comprised of the 37 securities that make up the DXAG, which includes companies from around the world that are engaged in various sectors of the agribusiness industry," says Van Eck's Adam Phillips, Director of ETF Sales. (See "MOO's Holdings")

Van Eck has been involved in following the ag industry since it first developed its Global Hard mutual fund in 1994. That fund can invest in ag-related companies and, as a result, Van Eck has been researching, analyzing and investing in ag stocks ever since.

So, it was a natural for the firm to develop its Market Vectors--Agribusiness ETF. "Because of our Global Hard Asset fund, we saw what was happening in the ag market and developed a solid view of its future. As a result, we developed and launched MOO," says Derek van Eck, Chief Investment Officer of Van Eck Global.

"MOO allows investors to get exposure to the ag market through a diversified portfolio," explains Phillips. "In addition, MOO includes prominent ag companies from around the world that local investors may be unaware of, plus it spreads the risk among all sectors within the industry. All that, plus the fees and expenses of an ETF like MOO can potentially be substantially less than those of a mutual fund."

One individual investor, AgriMarketing, spoke with agrees. "I knew the ag sector was hot and getting hotter," he says. "I wanted to get my slake in it, but didn't know how ... nor did my financial advisor. Once I became familiar with MOO, it made it simple and easy. So far, it has been an excellent investment, especially compared to most of the rest of my portfolio."

"I first became aware of MOO," when it was brought to my attention by a fund manager," reports a VP/Investor Relations for one of the companies whose stock is included in the ETF.

Asked about his reaction to it, he says, "There are good things and some challenges with an ETF like MOO. It does offer investors, who are looking to participate in the ag market, an easy and low cost way to enter.

"However," he warns, "it is not a pure ag play, as I see it. Included in its portfolio are some organizations that when grain prices are high, such as the crop inputs and machinery, but some that don't, such as the livestock and biofuels industries. So, you can have one sector of its holdings doing well that will push up the value, but others that could have a negative impact on MOO's returns. That said, I know there's value in being diversified."

MARKETING & SALES

With over 630 ETFs available to U.S. investors, and many new ones being created each month, creating awareness, branding and securing the order is a daunting task for even the best of marketers.

But through classic text book, time-proven techniques and, admittedly a little luck, Van Eck has succeeded in this overly contested market space.

"Once we decide to offer an ETF in a particular market sector, our most important decision is identifying the right index to use," says Van Eck Sr. VP/Mktg Harvey Hirsch. "We were bullish on the ag market and have been fortunate our outlook for it has been proven correct, especially at a time when the investment community has been focusing special attention on it. MOO received considerable press coverage shortly after its launch and still does to this day.

"Another factor," Hirsch says, "was breaking through the clutter with a creative and descriptive name. That's how we settled on MOO." (See "What's In A Name?")

Identifying their prospective customers was also an important consideration. "We have four target markets," Hirsch says. They include:

* Individual investors including clients of financial intermediaries that include investment advisors, wirehouse/regional brokers and financial planners, as well as self-directed investors (E-trade, Schwab, etc.);

* Institutional investors including fund managers and hedge funds;

* Traders including individuals and institutions who trade for short-term profits; and

* Influencers including the media, bloggers, researchers, market commentators and others.

Equipped with sales literature, solid web support and a new, unique product, Van Eck's sales force began contacting the target markets. Complemented by telemarketing and e-mail blasts, the word spread quickly about the ETF.

COMMUNICATIONS

Supporting the sales effort was an aggressive communications program created by Van Eck's advertising agency, West Palm, FL-based Venue Advertising and its public relations agency, New York, NY-based MacMillan Communications.

Armed with a multi-million dollar marketing budget, the largest in Van Eck's history, the company has been running ads in Barron's and other traditional investment publications.

"We also are running banner ad campaigns on Internet sites, including Bloomberg.com and Yahoo Finance," Hirsch says. "Other media used included direct mailings to targeted lists and Internet search engines."

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In addition to advertising, the company's PR activities are in high gear. "Interviews with the financial media, speeches at conferences, news releases," Hirsch says, "all had an important part in our integrated communications campaign."

LOOKING AHEAD

"We continue to be bullish on the ag market, both in the short- and the long-term," says Sam Halpert who is on the firm's Global Hard Asset investment team with special focus on the ag sector.

"The business of agriculture fuels populations around the world and has acted as the foundation commerce for centuries," he continues. "Growing populations and rising wealth in emerging markets such as China and India have led to increased demand for grains, sugar and oils. World population is predicted to surge to almost eight billion people by 2025 and emerging economies are expected to make up a significant portion of that growth."

Throw in the impact of the demand for ag products to produce biofuels, and government mandates requiring a near doubling of its use over the next five years and the future looks bright for the industry.

As Iowa State University's Dean of Agriculture and Life Sciences Dr. Wendy Wintersteen said last May, "We have entered the Golden Age for Agriculture which heralds the rebirth of our rural economy across much of America."

Now with the advent of Van Eck's MOO, even the smallest of investors can participate in this new Golden Ag Era.

by Lynn Henderson, Editorial Director

WHAT'S IN A NAME?

To agri-marketers, the name MOO seems a bit unflattering to the sophisticated ag industry. In fact, it conjures up a misperception many in the industry are trying to update.

However, the name was a hit among Van Eck's target markets. "MOO is whimsical, memorable and relates closely to our product" Van Eck's St. VP/Mktg Harvey Hirsch says. "It caught on almost immediately. The media almost invariably gave the symbol special mention in its coverage.

"When our sales people visited the offices of financial intermediaries, they were often greeted with a 'mooing' sound. Interestingly, there was some reluctance at the firm to use MOO as the symbol, but MOO's advocates would not be denied and they carried the day.

ABOUT VAN ECK

Founded in 1955 by John C. van Eck, the firm was among the first U.S. money managers helping investors achieve greater diversification through global investing.

The company's current senior leadership is composed of two members of the second generation, Jan F. and Derek S. van Eck, and the firm's President Keith Carlson.

With approximately $10 billion of assets under its management, the firm offers its products nationwide through retail brokers, financial planners and investment advisors.