The fund has a 40.8% allocation to the U.S. but invests in other countries such as the U.K., Canada, Australia, France and China.
“Most of the fund’s holdings have significant operating leverage and cannot quickly adjust production as commodity prices fluctuate. Consequently, they can experience wild swings in profitability,” says Alex Bryan, an analyst at Morningstar, which designed the tracking index for GUNR.
“This sensitivity allows the fund’s investors to profit handsomely from strengthening demand, but it also introduces substantial risk. However, because the fund derives its commodity exposure through equity securities, its performance will not directly correlate with commodity prices,” he added.
GUNR is down about 6% year to date.
FlexShares Global Upstream Natural Resources