The SPDR S&P North American Natural Resources ETF (NANR) as a Hedge Against Inflation

March 17, 2024 | by


The SPDR S&P North American Natural Resources ETF (NANR) emerges as a compelling hedge against the re-acceleration of inflation. With a well-diversified portfolio that extends beyond energy companies, this fund offers investors exposure to a range of resource equities. In addition, NANR boasts a competitive management fee of 0.35% and pays a quarterly dividend, enhancing potential returns. Notably, the fund has outperformed its counterparts, the Energy Select Sector SPDR Fund ETF (XLE), iShares North American Natural Resources ETF (IGE), and Van Eck Natural Resources ETF (HAP), over the past five years, further solidifying its desirability. Supported by the esteemed investor Jeremy Grantham, who recognizes the attractiveness of natural resource stocks as a diversifying and undervalued sector, NANR presents itself as an enticing investment opportunity. With top holdings that include prominent companies like Exxon Mobil, Chevron, Freeport McMoran, Corteva, and Newmont, NANR carries the potential for substantial long-term growth, making it a promising choice in the face of an extended period of inflation.

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The SPDR SP North American Natural Resources ETF (NANR) as a Hedge Against Inflation

Overview of the SPDR S&P North American Natural Resources ETF (NANR)

The SPDR S&P North American Natural Resources ETF (NANR) is a popular investment vehicle that is viewed as a hedge against inflation re-acceleration. This ETF is well diversified, focusing on resource equities beyond just energy companies. It offers investors exposure to various sectors related to natural resources, including materials, energy, agriculture, and metals.

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One of the key advantages of investing in NANR is its competitive management fee of 0.35%. This fee is comparatively lower than many other similar investment options, making it an attractive choice for cost-conscious investors. Additionally, NANR pays a quarterly dividend, providing a potential source of income for investors.

Performance of NANR

When comparing the performance of NANR with the Energy Select Sector SPDR Fund ETF (XLE) over the last five years, NANR has demonstrated stronger returns. While both ETFs focus on the energy sector, NANR’s diversification beyond energy companies has contributed to its outperformance. This broader exposure to natural resources has allowed NANR to capture opportunities in other sectors, such as metals and agriculture, which have shown robust growth in recent years.

Expert Opinion on Natural Resource Stocks

Renowned investor Jeremy Grantham has expressed a positive perspective on natural resource stocks as a diversifying sector. Grantham believes that investing in natural resource stocks can serve as a hedge against inflation and provide long-term growth potential. He considers the sector to be undervalued and expects the prices of natural resource stocks to rise in the future.

Grantham’s viewpoint aligns with the investment approach of NANR, which focuses on diversification and includes various natural resource sectors. This makes NANR an attractive option for investors seeking exposure to natural resources while aiming to mitigate risks associated with individual stocks.

Top Holdings of NANR

NANR’s top holdings include prominent companies in the natural resources sector. These holdings provide investors with exposure to leading corporations in areas such as energy, mining, and agriculture. Some of the top holdings of NANR are:

  1. Exxon Mobil: One of the largest publicly traded international oil and gas companies, with operations across the entire energy value chain.

  2. Chevron: A major player in the energy sector, engaged in exploration, production, refining, and marketing of petroleum products.

  3. Freeport McMoran: A leading global mining company, producing copper, gold, and molybdenum.

  4. Corteva: A multinational agricultural chemical and seed company, offering a wide range of products to improve crop yields and agricultural efficiency.

  5. Newmont: A leading gold mining company, engaged in the exploration, acquisition, development, and production of gold properties worldwide.

These holdings represent a diversified portfolio, covering different segments of the natural resources sector and providing investors with exposure to established industry leaders.

Competition Analysis

When comparing NANR with the iShares North American Natural Resources ETF (IGE) and the Van Eck Natural Resources ETF (HAP), NANR has demonstrated superior performance over the past five years. While all three ETFs provide exposure to natural resource stocks, NANR’s focus on diversification and wider range of sectors has allowed it to outperform its competitors.

IGE focuses primarily on energy companies, while HAP includes a broader range of sectors but has not achieved the same level of performance as NANR. NANR’s outperformance can be attributed to its allocation towards sectors like metals and agriculture, which have shown strong growth during the period.

Long-Term Buy Consideration

NANR is a suitable investment option for those expecting an extended period of inflation. As a hedge against inflation, natural resource stocks have historically performed well. The increasing demand for resources, coupled with the potential rise in prices, provides a favorable investment outlook for NANR.

Investors seeking long-term growth and diversification can consider including NANR in their portfolios. Its focus on natural resources beyond just energy companies, competitive management fee, and strong historical performance make it an attractive option. However, as with any investment decision, it is essential to conduct thorough research and consider individual financial goals and risk tolerance before making an investment in NANR or any other ETF.

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