Natural Resources ETFs: The Old-School Way to Play ESG Policies

One surprising clean energy ETF angle to play when it comes to a new presidential administration is the VanEck Vectors Natural Resources ETF (HAP). The obvious play has been to hop onboard the environmental, social, and governance (ESG) bandwagon. However, with clean energy policies comes the impetus to preserve natural resources, which puts HAP in the limelight. HAP seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the VanEck® Natural Resources Index. The fund normally invests at least 80% of its total assets in securities that comprise the fund’s benchmark index. The index is comprised of publicly traded companies engaged (derive greater than 50% of revenues from applicable sources) in the production and distribution of commodities and commodity-related products and services in the following sectors: 1) Agriculture; 2) Alternatives (Water & Alternative Energy); 3) Base and Industrial Metals; 4) Energy; 5) Forest Products; and 6) Precious Metals. HAP gives investors:
  • A Comprehensive Portfolio: The index contains global companies involved in six natural resources segments (including agriculture, energy, metals, and renewable energy).
  • Consumption Based-Weights: The fund offers broadly diversified natural resources exposure.
  • A Water and Renewable Energy Play: First commodity equity index to include alternatives.
  HAP is currently trading above its 50-day moving average and more strength could be ahead given how the relative strength index (RSI) shows that the fund has yet to reach the overbought level. An entry point could be now if ETF investors are looking for a backdoor ESG play on clean energy policies.
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ETFs to Bet On a Green Agenda

The rise in popularity of ESG will keep feeding into a green agenda, which should translate to more strength in HAP. “For decades now, the green agenda has included replacing oil- and coal-fueled power plants with solar energy,” a Real Clear Energy report said. “The argument is simple. A principal component of addressing the climate crisis is reducing greenhouse gas emissions, particularly those emitted by cars and power plants. Remarkably, over the last decade or so, there has been a marked increase in the use of the solar power farm, an enormous field of solar panels that can generate substantial quantities of solar power.” For more news and information, visit the Tactical Allocation Channel.