It’s still too early to tell if inflation has peaked. Real assets are a great way to augment a portfolio for better support during inflationary periods, making them a vital component of a well-diversified portfolio.
The FlexShares Morningstar Global Upstream Natural Resources Index Fund (GUNR) has performed well in the current environment, returning 5.01% over one month and 21.44% year-to-date, according to VettaFi, helping to explain its surge in popularity.
GUNR has seen $1.05 billion in net inflows year-to-date. The highly liquid fund has $9.1 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.
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 112 individual components, GUNR offers relatively deep exposure to the global commodity sector. The fund offers exposure to North, Central, and South America (54.12%), Europe (33.36%), and Asia Pacific (12.52%). Within that, U.S. stocks comprise 37.49% of the fund, trailed by Canada and the U.K. at 12.82% and 12.71%, respectively, according to VettaFi.
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. According to VettaFI, this fund should perform well when natural resource prices are on the rise.
GUNR can be used in several 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 commodities industry.
The fund is also a good fit for dividend-seeking investors, as it offers an annual dividend yield of 3.09%, according to VettaFi.
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