An Investor's Guide to AgTech & Food Innovation – Visual Capitalist

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The following content is sponsored by Global X ETFs.

The global food system is under immense pressure due to three overarching trends:
As these trends collide, agriculture technology (AgTech) and food innovation are emerging as two possible solutions. This infographic from Global X ETFs will explain both.
AgTech is the use of technology to maximize crop yields while conserving water and land. Here is a quick explanation of its segments.
Precision agriculture is the integration of artificial intelligence (AI) and the internet of things (IoT) into traditional farming practices. These technologies can provide farmers with more data, which in turn can be used to boost efficiency.
One example is the John Deere See & Spray machine, which uses various sensors to detect where weeds are. By only spraying weeds, farmers can reduce their herbicide use by up to 77%.
Robotics & automation aims to reduce the amount of manual labor needed in agriculture. This multi-billion dollar market includes autonomous berry pickers, which demonstrate over 60% more productivity than humans.
Drones can also play a role, especially in regions where water is becoming scarce. For example, farmers in California are investing in drones that monitor fields for leaks and other issues. They claim this technology reduces their water inputs by over 40%.
CEA is the cultivation of plants in an indoor setting. This market is still in its infancy, but the ability to grow food almost anywhere, all year round, could transform the playing field for agriculture.
One of the most prominent CEA methods is hydroponics, where plants are cultivated in a nutrient-rich water-based solution instead of soil. Hydroponics could mitigate many of the world’s agricultural problems:
Source: Princeton University
With pressures mounting on the global food system, innovative disruption will be needed to achieve long-term sustainability. AgTech solutions can certainly boost output, but what can be done on the consumption side?
Food innovation refers to plant-based foods and other alternatives such as lab-grown meat. Given the immense scale (and carbon footprint) of the meat and dairy industry, these innovations could reap environmental benefits.
In terms of market share, alternative foods still have a long way to go. The following table lists global meat and dairy sales, by category, in 2020.
Source: Global X ETFs
Considering that 80% of Americans have either purchased or are open to purchasing alternative meat products in the future, investors may view this sector as an attractive growth opportunity.
For further perspective, some analysts believe that by 2040, cultured meat (lab-grown meat) will account for 35% of the global market.
The Global X AgTech & Food Innovation ETF (Ticker: KROP) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Solactive AgTech & Food Innovation Index.
As of 01/31/2022
Investors can use this passively managed solution to gain exposure to innovation in the agriculture and food industries.
How do Institutional Investors Choose ETFs?
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Institutional investors are increasing their use of ETFs. Learn about their selection process in this infographic.
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Download the ETF Snapshot for free.
Although there are roughly 7,000 ETFs available globally, the majority of assets under management (AUM) belongs to a relatively small number of funds. In fact, among the 100 largest ETFs, the top 20 hold over 50% of the assets.
In this infographic from iShares, we rank the top criteria institutional investors use when selecting an ETF. It’s the last of a five-part series covering key insights from the ETF Snapshot, a comprehensive report on how ETFs are being used.
To assess how institutional investors navigated this volatility, Institutional Investor published a report in 2021 based on a survey of 766 decision makers. Respondents were from various types of organizations, firm sizes, and regions.
For instance, here is how responses broke down by location:
Here’s what the survey found.
The following table lists the most important criteria institutional investors consider when selecting an ETF.
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The key takeaway is that institutional investors seek large, highly liquid ETFs that are linked to the right benchmark. Perhaps surprisingly, management fees and transaction costs were the lowest priorities.
To gain further insight, survey respondents were asked to share their most preferred index provider for each asset class.
For international equities, MSCI was the top index provider with S&P trailing a close second. The two providers switched places when it came to domestic equities.
n=766
Next, respondents ranked their top choices for factor-based and ESG investments. MSCI and S&P were once again the most popular providers.
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Lastly, respondents ranked their top choices for fixed income investments. This included three categories: investment grade fixed income, high yield fixed income, and emerging market debt.
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S&P was the most popular provider across all three categories, with FTSE Russell coming in second.

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45% of institutional investors (n=762) said they consider an ETF provider’s value-added services when selecting an ETF.
“We use a number of tools—but we also rely on the provider of ETFs to a great extent. They have a lot of analytics in terms of trading activity, flows, and underlying liquidity of the asset class.
Senior Analyst, asset management firm
The following table ranks the most helpful value-added services.
n=762
To wrap things up, institutional investors were asked to share their ETF provider of choice. Here were the results.
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To recap the findings of this survey, institutional investors give the highest priority to AUM, liquidity, and trading volume. Beyond those criteria, other elements such as value-add services and fees can help to drive a final investment decision.
Download the ETF snapshot for free.
From complementing derivatives to bond sourcing, we show a growing set of ETF use cases over the last several decades.
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Download the ETF Snapshot for free.
Over the last 25 years, ETFs have exposed millions of U.S. investors to low-cost investments. Yet ETFs go far beyond low-cost and broad exposure. Institutional investors use ETFs for many functions, from bond sourcing to complementing derivatives.
In this infographic from iShares, we show the evolution of ETF use cases over several decades. It’s the fourth in a five-part series covering key insights from the ETF Snapshot, a comprehensive report on how institutional investors manage volatility.
Before: Investors looked to individual stocks or mutual funds to create a diversified portfolio.
After: When the first S&P 500 ETF was launched in the U.S. in 1993, exposure to a broad market became possible with a single security, removing several barriers to entry.
Before: Typically, investors used foreign exchanges or depository receipts to gain exposure to international markets. The challenges included additional costs, tax implications, research needs, and additional currency risks.
After: With the first international ETF in the mid-1990s, diversification was possible through broad-based foreign indices.
Before: Investors relied exclusively on a network of bank or broker inter dealers.
After: In a single security, investors could purchase a diversified basket of bonds. The result was typically more efficient trading and tighter bid-ask spreads.
Before: Socially responsible mutual funds emerged in the 1980s, screening out weapons, gambling, tobacco, and other categories. Often, mutual funds tracked the Domini Social Index, made of mostly 400 large-cap U.S. stocks.
After: With the launch of the first sustainable ETF, investors have a greater variety of sustainable investment options. This paves the way for hundreds of ESG ETFs to follow in the next 15 years.

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Before, cash and a variety of vehicles were used across investment strategies. The problem is that cash drag, lack of transparency, and poor liquidity can hurt performance.
According to an Institutional Investor report published in 2021 based on a survey of 766 decision makers, many institutions are using ETFs to overcome these challenges today:
When bond markets faced severe bottlenecks during COVID-19, 54% of institutions utilized bond ETFs to price, source, and transact bonds.
During the peak volatility of 2020, 52% of institutional investor respondents used ETFs as a complement or replacement for derivatives, according to the survey.
70% used ETFs to rebalance following historic levels of volatility.
65% of asset managers use ETFs as a part of their multi-asset strategies.
Six in ten institutions use ETFs for targeting market exposures.
When firms are transitioning to a new manager, 32% use ETFs.
73% of insurance and pension funds used ETFs in their liability-driven investment strategy, which requires having enough assets to cover liabilities, both current and future.
Historically, ETFs have offered a gateway to more efficient markets. Because of the transparency and flexibility of ETFs, institutions continue to find creative ways to use them.
Download the ETF Snapshot for free.
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