Real assets, such as precious metals, commodities, real estate, and oil, have a place in investors’ portfolios and these assets can be efficiently accessed with exchange traded funds. That includes the FlexShares Morningstar Global Upstream Natural Resource Index Fund (NYSEArca: GUNR).
GUNR provides exposure to the rising demand for natural resources and tracks global companies in the energy, metals and agriculture sectors, while maintaining a core exposure to the timberlands and water resources sectors.
GUNR specifically identifies upstream natural resources equities based on a Morningstar industry classification system, with a balanced exposure to three traditional natural resource sectors, including agriculture, energy and metals.
Real assets can enhance portfolio diversity will reducing correlations to traditional financial assets, such as stocks and bonds.
“Our analysis shows that real assets are generally not highly correlated with stocks and bonds, thus potentially adding diversification to a portfolio,” said FlexShares in a research note. “Asset correlation is a measure of how investments move in relation to one another and when. When assets move in the same direction at the same time, they are considered to be highly correlated. When one asset tends to move up when the other goes down, the two assets are considered to be negatively correlated.”