ETFs For Commodity Centric Countries
The evolution of the ETF industry has brought forth previously difficult-to-reach corners of the market to the fingertips of mainstream investors. Commodities in particular have seen a surge in popularity as investors have embraced the exchange-traded product wrapper as the preferred means for accessing this potentially lucrative asset class. The ETF universe is vast however, and investors now have multiple instruments at their disposal, allowing them to implement a multitude of investment strategies in a variety of ways [see How To Pick The Right ETF Every Time].
When it comes to commodities for example, investors can pick and choose from several dozen futures-based ETPs or opt for
a physically-backed alternative instead. Furthermore, some may wish to gain indirect exposure to natural resources by investing in a commodity producers ETF; this strategy can be an appealing way to tap into commodity prices without having to deal with the numerous nuances associated with futures-based products [try our Free ETF Screener].
There are several options for those who wish to follow a commodity centric investment strategy while at the same time adding geographic diversification to their portfolios. Investing in commodity producing countries is nothing new, and the evolution of the ETF product structure makes implementing such a strategy very straightforward and cost efficient.
Commodity producing nations are favorably positioned to thrive as global demand for raw materials continues to pick up, bolstered by an ever-expanding population across developed and emerging markets alike. Also, investing in commodity centric economies can serve as a potential hedge against declines in the U.S. dollar, since increasing prices for raw materials contributes to currency appreciation for exporting nations.
As such, below we highlight six ETFs offering diversified exposure to some of the world’s largest commodity exporting countries:
Guggenheim ABC High Dividend ETF (ABCS)
This Guggenheim ETF offers exposure to stocks from three of the largest commodity producers in the world: Australia, Brazil, and Canada. ABCS is dividend yield-weighted and holds approximately 30 securities. This ETF is extremely well-rounded from a sector perspective for an international offering; top allocations include telecom stocks, utilities, consumer discretionary & staples, as well as basic materials [see also Easy-As-ABC ETFdb Portfolio].
WisdomTree Commodity Country Equity Fund (CCXE)
This ETF holds roughly 150 dividend-paying companies from a basket of commodity centric nations, including: Australia, Brazil, Canada, Chile, New Zealand, Norway, Russia and South Africa. CCXE is well-balanced seeing as how each country receives an equal allocation, on top of which a maximum of 20 companies may be included in each country allocation. Unlike ABCS which is yield-weighted, the allocations in this ETF are based on annual cash dividends paid.
EGShares Dow Jones Emerging Markets Metals & Mining Titans Index Fund (EMT)
This fund offers more granular exposure for those looking to focus specifically on metals producers. EMT is made up of the 25 largest publicly-traded mining companies involved in industrial and precious metals exploration, extraction and production within the emerging world. Top allocations by country include: South Africa, Brazil, China, India, and Russia. Smaller allocations to Mexico, Poland, and Indonesia are also included [see also How To Find The Best Gold Miners ETF].
EGShares Energy GEMS ETF (OGEM)
Similar to EMT, this EGShares ETF offers energy sector-specific exposure across emerging markets. OGEM consists of 25 securities, offering exposure to oil & gas producers, oil & gas services, as well as alternative energy companies. From a geographic perspective, over half of the entire portfolio is split between Russia and China, while smaller allocation to Brazil and Thailand are also included [see also The Ultimate Guide To Screening Energy ETFs].
Thomson Reuters/Jefferies CRB Global Commodity Equity Index Fund (CRBQ)
This ETF holds approximately 150 companies from around the globe engaged in the production and distribution of commodities and commodity-related products and services in the agriculture, base/industrial metals, energy and precious metals sectors. In terms of allocation, agriculture and energy stocks receive the greatest weightings followed by equal allocations to precious and industrial metals producers. Top allocations by country include: United States, Canada, and the United Kingdom [see also Commodity Guru ETFdb Portfolio].
IndexIQ Global Resources ETF (GRES)
This ETF uses momentum and valuation factors to identify and select global companies that operate in commodity-specific market segments. GRES is made up of approximately 170 securities; U.S. stocks account for nearly half of total assets while other major holdings include Canada, Japan, Sweden, and Australia. GRES is well-rounded from a sector breakdown perspective, making allocations to timber, energy, and coal as well as industrial metals and livestock. This ETF separates itself from other offering in this space by also featuring short exposure to global equities as a partial equity market hedge [see GRES Fact Sheet].
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Disclosure: No positions at time of writing.