It has been a rough year for the energy and materials sectors, but those groups being two of 2015’s worst-performing sectors, 2016 could be the time to take a new look at natural resources stocks. That refreshment could come in the form of a new exchange traded fund, the SPDR S&P North American Natural Resources ETF (NYSEArca: NANR).
NANR, which debuted last week, tracks the S&P BMI North American Natural Resources Index, which is a subset of the S&P Global Large MidCap Commodity and Natural Resources Index, according to State Street Global Advisors (SSgA), the third-largest U.S. ETF issuer.
In the current environment, market observers have been focusing on the swings in the oil market. Carlson points out that while prices are depressed, American producers are still pumping out more oil.
For instance, a state-mandated time limit on drilling and major oil-tax incentive in North Dakota’s Bakken oil could fuel a production spike in the region. Meanwhile, oil demand remains relatively flat after seeing an average one-and-a-half percent growth rate from 1995 through the end of 2013. Dow components Exxon Mobil (NYSE: XOM) and Chevron (NYSE: CVX) are NANR’s two largest holdings.
Investors and advisors who want exposure in the energy sector but are wary about further volatility can utilize a diversified natural resource ETF to capture a broad group of resource companies.
“NANR is designed to meet demand for natural resources equity exposure by providing access to companies in the energy, materials and agriculture industries. NANR provides investors with an approach that weights the sub-sectors of the portfolio 45 percent energy, 35 percent materials and 20 percent agriculture stocks,” according to a statement from SSgA.
NANR holds nearly 60 stocks and charges 0.35% per year.
“Recent volatility in the energy sector has many clients asking us for a different approach to gaining exposure to US and Canadian natural resources companies than what may be currently available to them,” said James Ross, executive vice president and global head of SPDR Exchange Traded Funds at State Street Global Advisors, in the statement. “NANR offers a more balanced approach to investing in natural resources companies as opposed to a single sector energy allocation, which may be skewed to oil companies.”
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.