Renewable energy stocks and exchange traded funds are forecast to thrive if Democratic nominee Joe Biden wins the presidency in a couple of weeks, but a Biden Administration doesn’t have to be a drag on natural resources ETFs such as 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, which is a part of the risk management theme.
“Democratic presidential nominee Joe Biden may be against the further proliferation of fossil fuels, but observers have said a different part of the natural resource economy could get a lift if he bests President Donald Trump in the U.S. election in November: the metals and mining sector,” reports S&P Global Market Intelligence.
A Mixed Mining Sector
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. With some wild moves in downtrodden energy stocks, the gambling element of energy investing is back, but investors can take some risk out of the equation with GUNR.
“Now, on the cusp of a U.S. presidential election unlike any other, the country’s mining sector has positioned itself politically as critical to a recovery from the COVID-19 pandemic and to the global transition away from fossil fuels,” according to S&P Global. “And Biden, a labor union favorite from the legacy coal town of Scranton, Pa., has floated a raft of economic policy proposals that observers believe could deliver the demand stimulus generally missing from Trump.”
Some analysts are growing concerned that global troubles could drag down the industrial metal as well. Along with the trade concerns, copper prices were weakening on softening global economic data. The base metal is a significant component in many industries, including construction, and is widely seen as a barometer for global economic health.
However, Biden is expected to take a softer approach to dealing with China – assuming he wins – and that is viewed as a plus for natural resources stocks because China could up imports of US-produced commodities as relations between the world’s two largest economies improve.
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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.