As investors flock to commodities as a way to hedge inflation, they should consider the FlexShares Morningstar Global Upstream Natural Resources Index Fund (GUNR) for its strong past performance and low expense ratio.
GUNR has returned 2% over a one-week period, 16.36% year to date, and 27.92% over a one-year period. It’s long-term performance is also strong, returning a non-annualized 59.68% over a three-year period and 86.29% over a five-year period, according to ETF Database.
The highly liquid fund has $7.8 billion in assets under management and charges an expense ratio of 46 basis points.
This fund is one of the more unique products in the Commodity Producers Equities ETFdb Category as GUNR focuses on the “upstream” portion of the natural resources supply chain, maintaining meaningful exposure to the water and timber industries along with positions in companies engaged in energy production, metals extraction, and agriculture, according to ETF Database.
This product consists of many well-known stocks, including Exxon Mobil, Chevron Corporation, ConocoPhillips, and Tyson Foods. While it offers some exposure to mid-cap stocks, it is tilted heavily toward large- and mega-cap stocks, including Big Oil and major mining firms.
With more than 100 individual components, GUNR offers relatively deep exposure to the global commodity sector; it also achieves impressive balance, spreading holdings relatively evenly across the basket of stocks.
The fund offers exposure to North, Central, and South America (60.8%), Europe (27.19%), and Asia Pacific (12.01%). Within that, U.S. stocks comprise 43.14% of the fund, trailed by Canada and the UK at 13.48% and 9.61%, respectively, according to ETF Database.
GUNR can offer investors “indirect” exposure to commodity prices because the profitability of the component stocks tends to move in unison with spot prices of the underlying resources. Thus, this fund should perform well when natural resource prices are on the rise, according to ETF Database.
GUNR can be used in a number of different ways. Investors looking to add exposure to commodity-intensive equities might find this fund to be a valuable addition to a long-term, buy-and-hold portfolio. It can also be an effective way to establish more tactical, short-term exposure to the commodity industry, according to ETF Database.
The fund is also a good fit for dividend-seeking investors as it offers an annual dividend yield of 3.09%, according to the ETF Database.
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