ETF spotlight on IQ ARB Global Resources ETF (NYSEArca: GRES), part of an ongoing series.
Assets: $66.8 million.
Objective: The IQ Global Resources ETF tries to reflect the performance of the IQ Global Resources Index, which holds global companies that operate in commodity sub-sectors based on momentum and valuation factors.
Holdings: Top holdings include: Invesco Treasury Institutional 7.3%, Sandvik AB 5.4%, Kraft Foods Inc. (NYSE: KFT) 4.3%, Barrick Gold Corp. (NYSE: ABX) 3.6% and ITT Corp. (NYSE: ITT) 3.5%.
What You Should Know:
- IndexIQ sponsors the fund.
- GRES has an expense ratio of 0.75%.
- The fund has 147 holdings.
- Sector allocations as of 12/31/2011 include: Industrial Metals 19.7%, Grains Food Fiber 18.8%, Livestock 18.4%, Water 17.5%, Precious Metals 6.0%, Coal 8.9%, Timber 2.4%, Energy 2.3%, Equity Market Hedge -20.9%.
- The fund tries to include some short exposure to global equities as a partial equity market hedge.
- Top country allocations as of 12/31/2011 include: U.S. 41.1%, U.K. 17.1%, Australia 9.0%, Canada 5.3%, Japan 5.2%, France 3.2%, Sweden 2.0, Singapore 1.9%, Switzerland 1.9% and Netherlands 1.5%.
- GRES is up 4.4% over the last month, 2.4% higher over the past three months and down 3.9% over the past year.
- Due to the Fed’s decision to keep rates low until late 2014, commodity prices will likely continue to strengthen, which will also help companies engaged in procuring resources.
The Latest News:
- In a note, Adam Patti, CEO of IndexIQ, said that investors may now have a new entry point into commodity-related investments after the significant correction.
- “We think the current dip is just a pause in a long-running bull market,” Patti said.
- Patti noted that the fundamentals are in favor of commodities, especially demand from the emerging markets.
- “Even for investors unsure about the direction of the commodities markets, it generally makes sense to maintain some exposure to the asset class as part of an overall diversification strategy,” Patti added. “While the demand can be cyclical, the long-term trends have been heading up.”
IQ ARB Global 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.