High demand in both developed and
is driving the globalization and utilization of natural
resources. Some companies are poised to profit from the resulting
rising cost of agriculture, timber, water, metals and energy.
Selecting the right sector and company to capitalize on this
opportunity may prove to be a tough task. Fortunately, the
FlexShares Morningstar Global Upstream Natural Resources Fund
) provides broad exposure to each of these asset classes with a
GUNR currently has more than $3 billion dedicated to 124
worldwide companies engaged in the natural resources supply
chain. Top holdings include well-known stocks such as BHP
), Exxon Mobil (NYSE:
) and Monsanto (NYSE:
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currently charges an expense ratio of 0.48 percent and has a
30-day SEC yield of 2.26 percent. So far in 2014, GUNR has
returned 10.64 percent to shareholders, as themes such as energy
and precious metals have surged.
One unique characteristic of GUNR is that the index strategy
seeks out companies focused on the "upstream" portion of the
supply chain. This means that they are directly responsible for
extracting and delivering the resources before they are converted
to a finished product.
The advantage of being closer to the upstream operations is
that the companies are more closely tied to price increases in
the commodities they deal in. This positioning can be
particularly appealing in an inflationary environment.
Instead of focusing in just one area, GUNR captures a wide
swath of companies in a diversified basket of holdings. This
allows for greater stability if one or more natural resources
sector is lagging its peers.
This ETF is also a truly global vehicle, with only 38 percent
of the underlying stocks residing in the United States. Other top
countries include the United Kingdom, Canada and Australia. In
addition, over 79 percent of the companies are classified as
GUNR may be a good fit for investors that are looking to
capitalize on the dual trends of natural resource consumption and
rising commodity prices.
© 2014 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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