We have been pounding the table urging investors to overweight commodities and commodity-related investments in their portfolios, recalls Kuen Chan, editor of The Complete Investor.
To make it super easy to do so, we’re adding SPDR S&P Global Natural Resources ETF (GNR) to our Core ETFs Portfolio.
This ETF of natural resources and commodity stocks seeks to track the performance of the S&P Global Natural Resources Index (the “Index”). The Index itself aims to provide exposure to the most liquid and largest-cap securities in three nat-ural resource sectors: energy, metals and mining, and agriculture.
The Index caps the weight of each sector, or sub-index, at one-third, so essentially all three sectors get equal representation. Moreover, within each sub-index, exposure to U.S. stocks and emerging market stocks is limited to 40% and 15%, respectively. Thus, true to its name, the Index offers broad geographical coverage, with 24 countries represented.
The Index has 90 members, but as of this writing, the ETF holds 101 securities. The difference arises because the ETF does not mirror the Index’s holdings exactly. While GNR must invest at least 80% of its total assets in stocks in the Index, it’s not required to invest in each of the Index’s 90 stocks.
And it can hold other investments, including foreign currencies and derivatives, that help it track the performance of the Index. Regardless of this minor discrepancy, GNR offers investors a one-step investment in a diversified group of companies in the natural resources and commodities arena.
GNR’s top 10 positions, representing about 36% of assets, are BHP (BHP), Nutrien (NTR), Shell (SHEL), Glencore (GLNCY), Exxon (XOM), TotalEnergies (TTE), Vale (VALE), BP plc (BP), Chevron (CVX), and Helsinki-listed UPM-Kymmene Oyj (UPM)
While our long-term bullish outlook on commodities means we view GNR as a growth play, it’s an income play as well. The ETF offers a 3.9% dividend, higher than some companies seen as dividend stalwarts.
However, because most of GNR’s holdings aren’t US companies, which typically pay a regular quarterly dividend, the ETF’s dividends are paid semi-annually, and the amount tends to fluctuate depending on how good business has been for the companies in the fund. Still, in the past 10 years, GNR has paid at least $0.84 per share in every calendar year.
