ETF Spotlight: Global Natural Resources Sector

October 9th at 11:45am by Tom Lydon

ETF Spotlight on SPDR S&P Global Natural Resources ETF (NYSEArca: GNR), part of an ongoing series.

Assets: $415 million.

Objective: The SPDR S&P Global Natural Resources fund tries to reflect the performance of the S&P Global Natural resources Index, which is comprised of the largest companies involved in global natural resources and commodities businesses.

Holdings: Top holdings include Exxon Mobile (NYSE: XOM) 5.1%, Bhp Billiton (NYSE: BHP) 4.7%, Monsanto Co (NYSE: MON) 4.1% Chevron Corp (NYSE: CVX) 3.7% and Potash Corp (NYSE: POT) 3.0%.

What You Should Know:

  • State Street Global Advisors sponsors the fund.
  • GNR has a 0.40% expense ratio.
  • The fund has 106 holdings and the top ten make up 32.1% of the overall portfolio.
  • The ETF has a 1.88% dividend yield.
  • Sub-sector allocations include; integrated oil & gas 26.4%, fertilizer & agricultural chemicals 19.4%, diversified metals & mining 16.2%, gold 8.2%, steel 8.0%, oil & gas exploration & production 5.1%, agricultural products 5.1%, paper products 3.2%, specialized REITs 2.3%, paper packaging 1.3%, oil & gas refining & marketing 1.0%, household products 0.9% and aluminum 0.5%.
  • Country allocations: U.S. 32.3%, Canada 13.0%, U.K. 11.0%, Australia 9.5%, Russia 4.7%, Brazil 3.6%, France 3.1%, Switzerland 3.0%, Norway 2.5%, Singapore 1.9%, South Korea 1.5%, Germany 1.4%, Japan 1.4%, Israel 1.4%, Italy 1.3%, Peru 1.3%, Colombia 1.2%, China 1.2%, South Africa 1.0%, Sweden 1.0%, Chile 0.9%, Finland 0.8%, India 0.5%, Spain 0.4% and Netherlands 0.2%.
  • GNR is up 6.4% over the past month, up 5.2% over the last three months and up 5.5% year-to-date.
  • The fund is 2.0% above its 200-day exponential moving average.
  • “The idea is that by combining exposure to these sectors, this exchange-traded fund can offer investors a smoother ride,” writes Alex Bryan, ETF specialist, for Morningstar.
  • “The performance of companies operating natural-resources businesses is invariably tied to the prices of the commodities they sell,” Bryan added. “Commodity prices tend to be more sensitive than the overall equity market to changes in aggregate demand because demand shocks are amplified up the supply chain, as downstream producers order raw materials in bulk ahead of forecasted demand.”

The Latest News:

  • Correlations between resource sectors are rising as a result of a weak global demand driven by a slowdown in China and and the Eurozone debt problems continue to weigh on commodities.
  • “Refined product demand persists in being poor, reflective of the overall economy,” John Kilduff, partner at Again Capital LLC, said in a Reuters article.
  • Largest U.S. fertilizer company, Mosaic, announced that weak demand from China and India have hurt profits, reports, Matthew Craft for CSMonitor.

SPDR S&P Global Natural Resources ETF

For past stories in this series, visit our ETF Spotlight category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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