Investing in the best natural resources ETFs can provide a strategic and diversified approach for those looking to capitalize on the growing demand for commodities and resource-related industries.
The natural resources sector encompasses enterprises involved in the exploitation of various commodities, including but not limited to coal, oil shale, sand, metallic ore, and gravel.
Additionally, it may encompass activities such as logging and drilling for the extraction of oil and gas resources.
The inclusion of natural resource investing has always been a fundamental component of strategic asset allocation.
Natural resources serve as valuable assets, particularly in periods characterized by increasing inflation or the devaluation of currencies.
However, the industry is associated with potential hazards, including unfavourable political, economic, and regulatory factors.
Given the potential drawbacks outlined above, it is advisable to consider investing in natural resources as a component of a diversified investment strategy.
One potential avenue for gaining exposure to this sector is via investing in natural resources ETFs.
Private banking clients seeking to diversify their portfolios often turn to investment funds, and when considering sector-specific options, they might explore the best natural resources ETFs, best energy ETFs, best consumer staples ETFs, and best biotech ETFs for a well-rounded investment strategy.
If you want to invest as an expat or high-net-worth individual, you can email me (advice@adamfayed.com) or use these contact options.
Table of Contents
Global X Copper Miners ETF (NYSE:COPX)
The Global X Copper Miners ETF (NYSE:COPX) was formed in April 2010 to replicate the Solactive Global Copper Miners Total Return Index’s price and yield.
This ETF exposes investors to many copper mining businesses. As of October 9, the ETF manages $1.43 billion in net assets with a 0.65% cost ratio.
South Copper Corporation (NYSE:SCCO) is a major holding in the Global X Copper Miners ETF. Southern Copper Corporation (NYSE:SCCO) discovers, processes, and mines copper and other minerals worldwide.
According to the second-quarter database, 25 hedge funds liked Southern Copper Corporation (NYSE:SCCO). Similar to the previous quarter, 19 hedge funds held the firm.
Global X Lithium & Battery Tech ETF (NYSE:LIT)
In July 2010, the Global X Lithium & Battery Tech ETF (NYSE:LIT) was created to replicate the Solactive Global Lithium Index.
The ETF invests in lithium discovery, processing, and distribution companies. On October 9, the ETF managed $2.46 billion in net assets with a cost ratio of 0.75%.
Albemarle Corporation, listed on the NYSE as ALB, is a major component of the Global X Lithium & Battery Tech ETF, listed as LIT. Albemarle Corporation (NYSE:ALB) researches, manufactures, and distributes lithium, bromine, and catalyst chemicals.
According to the second-quarter database, 41 hedge funds liked Albemarle Corporation (NYSE:ALB). Over the past quarter, the number has remained stable.
SPDR S&P Metals and Mining ETF (NYSE:XME)
The SPDR S&P Metals and Mining ETF (NYSE:XME), launched in June 2006, aims for investment results similar to the Select Industry Index.
The ETF gives investors access to the S&P TMI metals and mining index. This category contains Aluminum, Coal & Consumable Fuels, Precious Metals & Minerals, and Metals & Mining firms.
The ETF manages $1.65 billion in assets with a 0.35% cost ratio as of October 9.
Alpha Metallurgical Resources, Inc. (NYSE: AMR) is a major SPDR S&P Metals and Mining ETF holding. Alpha Metallurgical Resources, Inc. (NYSE:AMR) concentrates on coal mining.
According to the second-quarter database, 20 hedge funds liked Alpha Metallurgical Resources, Inc. (NYSE:AMR). Last quarter, it was 21.
Alpha Metallurgical Resources, Inc. (NYSE: AMR) may be a good natural resources investment like Southern Copper Corporation (NYSE: SCCO), Danaher Corporation (NYSE: DHR), and Albemarle Corporation.
First Trust Water ETF (NYSE:FIW)
The First Trust Water ETF (NYSE:FIW) was launched in May 2007 with the objective of replicating investment outcomes that are in line with the performance of the ISE Clean Edge Water Index.
The present index encompasses enterprises that get a significant proportion of their sales from the potable and wastewater sector.
As of October 9th, the ETF oversees a portfolio of assets valued at $1.33 billion, with an associated cost ratio of 0.53%. This particular ETF is regarded as one of the top choices for investing in natural resources.
Advanced Drainage Systems, Inc., a publicly-traded company listed on the New York Stock Exchange under the ticker symbol WMS, is among the prominent assets held inside the First Trust Water Exchange-Traded Fund, which is also listed on the New York Stock Exchange under the ticker symbol FIW.
Advanced Drainage Systems, Inc. (NYSE:WMS) is a company that focuses on the production of water management solutions, namely in the areas of pipes and drainage.
Based on the second-quarter database, it was seen that the number of hedge funds expressing a positive outlook on Advanced Drainage Systems, Inc. (NYSE:WMS) increased from 21 in the previous quarter to 30.
Materials Select Sector SPDR Fund (NYSE:XLB)
The primary objective of the Materials Select Sector SPDR Fund (NYSE:XLB) is to replicate the investment returns generated by the Materials Select Sector Index.
The index is a representation of the materials sector within the S&P 500 Index, offering exposure to companies engaged in several industries including chemical, containers and packaging, construction materials, and metals and mining.
The ETF was initially presented in December of 1998. As of October 9th, the ETF currently oversees a portfolio valued at $5.2 billion, accompanied by an expense ratio of 0.10%.
Air Products and Chemicals, Inc. (NYSE:APD) represents a notable constituent within the Materials Select Sector SPDR Fund (NYSE:XLB).
Air Products and Chemicals, Inc. (NYSE:APD) is a multinational corporation that specializes in the provision of specialty gases, associated equipment, and related services.
Based on the second quarter database, it was seen that there was a decrease in the number of hedge funds exhibiting a positive sentiment towards Air Products and Chemicals, Inc. (NYSE:APD).
Specifically, the number of optimistic hedge funds decreased from 48 in the previous quarter to 43.
Invesco Water Resources ETF (NASDAQ:PHO)
The Invesco Water Resources ETF (NASDAQ: PHO) was introduced in December 2005 and is associated with the NASDAQ OMX US Water Index.
This index serves as an indicator of the financial performance of American enterprises engaged in activities related to water conservation and purification.
The ETF ensures that at least 90% of its overall assets are invested in common stocks, global depositary receipts (GDRs), and American depositary receipts (ADRs) of companies operating in the water industry, as specified by the underlying index.
As of October 9th, the ETF is responsible for overseeing a collection of 40 equities inside its portfolio.
Additionally, it is worth noting that this ETF exhibits an expense ratio of 0.60%. The Invesco Water Resources ETF (NASDAQ:PHO) is among the top natural resources ETFs.
The ETF ensures that at least 90% of its overall assets are invested in common stocks, global depositary receipts (GDRs), and American depositary receipts (ADRs) of companies operating in the water industry, as specified by the underlying index.
As of October 9th, the ETF is responsible for overseeing a collection of 40 equities inside its portfolio.
Additionally, it is worth noting that this ETF exhibits an expense ratio of 0.60%. The Invesco Water Resources ETF (NASDAQ:PHO) is among the top natural resources ETFsx.
The Danaher Corporation (NYSE:DHR) is a notable constituent of the Invesco Water Resources ETF (NASDAQ:PHO).
The Danaher Corporation (NYSE:DHR) is a company that focuses on the production of medical, industrial, and professional goods across four distinct sectors: Diagnostics, Life Sciences, Environmental & Applied Solutions, and Biotechnology.
Based on the second quarter database, it was found that a total of 89 hedge funds had a positive outlook towards Danaher Corporation (NYSE:DHR).
In contrast, a comparable number of hedge funds, specifically 90, maintained a position in the firm throughout the previous quarter.
Fidelity MSCI Materials Index ETF (NYSE:FMAT)
The Fidelity MSCI Materials Index ETF (NYSE:FMAT) was initially released in October 2013. It is designed to mirror the performance of the MSCI USA IMI Materials 25/50 Index by investing a minimum of 80% of its assets in securities included in the index.
The index comprises equities within the materials sector in accordance with the global industrial classification standard.
As of October 9, the ETF effectively oversees a cumulative value of $439.75 million in assets by means of a diversified portfolio consisting of 120 individual companies.
Additionally, the ETF successfully maintains an expense ratio of 0.084% in order to control operational costs.
Linde plc, a publicly-traded company listed on the New York Stock Exchange under the ticker symbol LIN, has the position of the largest holding within the Fidelity MSCI Materials Index ETF, which is also listed on the New York Stock Exchange under the ticker symbol FMAT.
Linde plc (NYSE: LIN) is a multinational corporation that operates as a prominent supplier of industrial gases throughout several regions including America, Africa, Europe, and the Middle East.
Based on the second quarter statistics provided, it was found that a total of 70 hedge funds had a positive sentiment towards Linde plc (NYSE:LIN). The numerical value in question stayed constant over the previous quarter.
Linde plc (NYSE:LIN) is considered to be among the top natural resources ETFs for investment, with Danaher Corporation (NYSE:DHR), Southern Copper Corporation (NYSE:SCCO), and Albemarle Corporation (NYSE:ALB).
Global X Uranium ETF (NYSE:URA)
The Global X Uranium ETF (NYSE:URA) was established in November 2010 with the objective of replicating the investment outcomes of the Solactive Global Uranium & Nuclear Components Total Return Index.
The ETF offers investors the opportunity to get exposure to corporations involved in the extraction of uranium and the manufacturing of nuclear components.
As of October 9, the ETF has a total asset value of $2.03 billion, accompanied by an expense ratio of 0.69%.
Cameco Corporation (NYSE:CCJ) represents the largest position within the Global X Uranium ETF (NYSE:URA). Cameco Corporation (NYSE:CCJ) engages in the exploration, mining, and sale of uranium for power generation, operating within two distinct segments: Uranium and Fuel Services.
Based on the second quarter database provided, it was seen that the number of hedge funds expressing a positive outlook on Cameco Corporation (NYSE:CCJ) increased from 49 in the previous quarter to 54.
Invesco Global Water ETF (NASDAQ:PIO)
The Invesco Global Water ETF (NASDAQ:PIO) was introduced in June 2007. It follows the Nasdaq OMX Global Water Index and invests at least 90% of its total assets in companies involved in the provision of water utilities, water conservation, and water treatment services.
As of October 9, the ETF has a portfolio consisting of 46 equities, all the while keeping an expense ratio of 0.75%. This particular ETF is considered to be among the top natural resources ETFs.
Pentair plc, a publicly-traded company listed on the New York Stock Exchange under the ticker symbol PNR, represents a significant portion of the investment portfolio held by the Invesco Global Water ETF, which is traded on the NASDAQ under the ticker symbol PIO.
Pentair plc (NYSE:PNR) operates as a supplier of water solutions in three distinct divisions, namely Pool, Water Solutions, and Industrial & Flow Technologies.
In addition to producing commercial and residential pool equipment, the firm also engages in the manufacturing of pumps and heaters.
Based on the second quarter database, it was seen that the number of hedge funds investing in Pentair plc (NYSE:PNR) decreased from 34 in the previous quarter to 33.
Final Thoughts
The field of natural resource investing is seeing growth and expansion. During the 1970s and 1990s, the accessibility of water investments was limited.
One would need to ascertain the companies that derive a substantial portion of their revenue from water-related activities, and thereafter acquire them.
One can streamline the process by utilizing Invesco Water Resources (PHO) and other similar natural resources ETFs.
In many domains, the alteration has only resulted in an additional expansion of available options. Investors retain the ability to acquire shares in coal mining enterprises, participate in coal ETFs, engage in coal futures trading, or procure coal shipments for storage.
The scope of opportunities in natural resource investment remains largely unrestricted. Given the escalating need for resources and the corresponding selection of investment options, this field presents a very captivating prospect for investors.
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