GUNR - GUNR: Natural Resources In Play For 2024

2024-01-11 13:09:45 ET

Summary

• FlexShares Morningstar Global Upstream Natural Resources Index Fund ETF is a good way to gain exposure to natural resources without directly investing in futures.
• The GUNR ETF is managed by Northern Trust's FlexShares and has a total net asset value of $6.74 billion.
• GUNR offers diversified exposure to global real assets and has delivered solid returns, making it worth considering for investors.

There are a lot of good ways to play natural resources (primarily Oil and Gas) without having to go directly into the futures market and instead using stocks as proxies. The FlexShares Morningstar Global Upstream Natural Resources Index Fund ETF ( GUNR ) is one of the good ways to get diversified exposure to the space. Yes, natural resource investing was disappointing last year, but we could see a reversion to the mean happen as momentum shifts back to investing in commodities plays.

GUNR is an exchange-traded fund, or ETF, managed by Northern Trust's FlexShares. The fund seeks to provide investors with comprehensive exposure to companies involved in the management and production of natural resources across the globe. GUNR has a total net asset value of $6.74 billion, with 188 holdings in its portfolio. The fund's primary exchange is NYSE Arca, and it has an inception date of September 16, 2011.

Key Holdings of FlexShares GUNR

GUNR's top holdings include:

• BHP Group Limited ( BHP ) : Standing as the most valuable mining entity globally in terms of market cap, BHP Group has its roots in Australia and specializes in the discovery and extraction of essential minerals such as iron ore, coal used in steelmaking, and copper.

• Exxon Mobil Corporation ( XOM ) : Originating from the United States, ExxonMobil is a leading entity in the energy domain, conducting operations globally across the entire spectrum of the oil and gas industry, including exploration, extraction, and refining processes.

• Shell plc ( SHEL ) : Shell represents a worldwide conglomerate of energy and chemical enterprises, boasting a workforce of approximately 92,000 across over 70 countries.

• TotalEnergies SE ( TTE ) : With its establishment dating back to 1924, TotalEnergies is a French company with a global presence, recognized as one of the top seven "supermajor" oil companies around the globe.

• Chevron Corporation ( CVX ) : Chevron stands as a global powerhouse in the energy sector, being one of the premier American multinational corporations within the oil industry.

The top 10 holdings make up 37% of the assets, making it not as concentrated as other funds in the space.

Peer Comparison

When compared to similar ETFs such as the Alerian Energy Infrastructure ETF ( ENFR ), which focuses on North American energy infrastructure companies, GUNR offers a more diversified exposure to global real assets. While ENFR primarily holds companies in the Pipeline Transportation and Gathering & Processing sectors, GUNR's holdings span across multiple sectors and geographies, providing a wider range of real assets and natural resources exposure. The two funds have largely had the same overall performance.

Pros and Cons of Investing in FlexShares GUNR

Pros

1. Diversification: GUNR offers exposure to a wide range of real assets and natural resources, thus providing a diversified investment option.

2. Inflation Hedge: Investments in real assets are widely seen as asset classes that benefit from inflation. This makes GUNR a good hedge against inflation.

3. Potential for High Returns: According to historical data, GUNR has delivered solid returns over the years, outperforming many other funds in its category.

Cons

1. Expense Ratio: GUNR has a slightly higher expense ratio (0.46%) compared to some other index funds. This means that a portion of your investment goes towards fund management fees.

2. Risk: Investing in natural resources and real assets can be risky due to market volatility and geopolitical factors.

Conclusion: To Invest or Not to Invest?

Investing in the FlexShares Morningstar Global Upstream Natural Resources Index Fund can be an attractive option for those seeking to diversify their portfolio and hedge against inflation. The fund's wide exposure to real assets and natural resources, coupled with its historical performance, makes it worth considering. However, like any investment, it's essential to consider the risks involved. The fund's slightly higher expense ratio and the inherent risks associated with investing in natural resources and real assets should be taken into account before making an investment decision.

I think it's a good fund. If global growth picks up (being driven mainly by China), we could see a resurgence in natural resources broadly, making FlexShares Morningstar Global Upstream Natural Resources Index Fund ETF one to keep on your radar.

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