The equities markets have experienced large swings, mirroring the uncertainty in the global economies. Nevertheless, exchange traded fund investors can play two major global macroeconomic themes: rising food and energy prices.
Jim Lowell of Forbes ETF Advisor highlights the world’s growing energy needs and the greater demand for agricultural commodities as two key key long-term trends.
For instance, the Associated Press recently reported that Northern India’s power grid, the size of the U.S., shut down on July 30, “halting hundreds of trains, forcing hospitals and airports to use backup generators, and leaving 370 million people—more than the population of the United States and Canada combined—sweltering in the summer heat.”
“The blackout, the worst to hit India in a decade, highlighted the nation’s inability to feed a growing hunger for energy as it strives to become a regional economic power,” according to the Associated Press.
Lowell points to the iShares DJ US Oil Equipment and Services (NYSEArca: IEZ) as a potential investment opportunity that provides exposure to everything related to locating, pumping, processing, shipping and building sources of energy.
Moreover, Lowell comments on the disproportionate demand to supply of basic commodity goods. Bloomberg recently reported that of the 18 states that produce corn, only 31% of crops were rated good or excellent this week, or down from 44% last week and 66% for the same period last year.
Invesco PowerShares Agriculture ETF (NYSEArca: DBA) provides a broad exposure to a basket of commodities, including cattle, cocoa, coffee, corn, cotton, hogs, soybeans, and wheat. As the drought is prolonged, the world may expect to see higher food prices. [How High Can Corn ETF Rally on Drought?]
For more information on sector funds, visit our sector ETFs category.
Max Chen contributed to this article.