Get Balanced Natural-Resources Exposure With This ETF
Equal subsector weightings and attractive valuations make this an interesting choice for risk-tolerant investors.
Alex Bryan: Despite their volatility, stocks linked to natural resources can offer some good diversification benefits. Natural resources are key cost drivers for firms in many industries. In contrast, companies linked to natural resources tend to become more profitable as commodity prices rise either through direct sales or indirectly through increased demand from their customers who are engaged in commodity production.
SPDR S&P Global Natural Resources ETF (GNR) offers a good way to get exposure to these types of companies. It invests in the world's 90 largest companies operating in the energy, agriculture, and metals and mining sectors. In order to improve diversification, the fund assigns equal weightings to each of these three sectors. And that's a notable improvement over some of its market-cap weighted peers, which tend to make very heavy bets on the energy sector.
Alex Bryan does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.