Betting on rebounds in natural resources stocks might appear like a bold move right now, especially when considering the energy and materials sectors are two of the worst performing groups in the S&P 500 this year.
Those sectors have also been home to plenty of dividend cuts, along with being homes to the bulk of the defaults seen in the U.S. high-yield corporate bond space this year.
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New Energy And Materials ETF
Indeed, there are dark clouds hanging over natural resources stocks, but investors willing to bet the energy and materials sectors are close to their nadirs have a new exchange-traded fund vehicle with which to express that view: The SPDR S&P North American Natural Resources ETF (NYSE: NANR), which debuted earlier this week.
NANR is designed to meet demand for natural resources equity exposure by providing access to companies in the energy, materials and agriculture industries. NANR provides investors with an approach that weights the sub-sectors of the portfolio 45 percent energy, 35 percent materials and 20 percent agriculture stocks, according to a statement from State Street Global Advisors (SSgA).
The SPDR S&P North American Natural Resources ETF follows the S&P BMI North American Natural Resources Index, which is a subset of the S&P Global Large MidCap Commodity and Natural Resources Index, according to SSgA.
A Little About NANR
NANR holds 59 stocks with a weighted average market value of over $65.8 billion. Given the rapid erosion in shares prices of many energy and materials names this year, NANR sports a dividend yield of 2.88 percent, which is more than 60 basis points above where 10-year Treasury yields closed on Thursday.
Recent volatility in the energy sector has many clients asking us for a different approach to gaining exposure to US and Canadian natural resources companies than what may be currently available to them, said James Ross, executive vice president and global head of SPDR Exchange Traded Funds at State Street Global Advisors, in the statement.
NANR offers a more balanced approach to investing in natural resources companies as opposed to a single sector energy allocation, which may be skewed to oil companies.
Dow components Exxon Mobil Corporation (NYSE:XOM) and Chevron Corporation (NYSE:CVX), the two largest U.S. oil companies, combine for 20.5 percent of NANR's weight. The new ETF also features Alcoa Inc (NYSE:AA) and Barrick Gold Corporation (USA) (NYSE:ABX) among its top 10 holdings.
NANR's annual fee is 0.35 percent, or $35 per $10,000 invested.
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