Inflation, now running at its highest levels in four decades, is the biggest concern for investors this year. CPI report for the month of May came in hotter than expected last week and raised concerns that the Fed could act more aggressively to tame surging prices.
It remains to be seen whether the central bank would be able to engineer a soft landing, by tightening monetary policy just enough to calm inflation while avoiding a recession.
Natural resources like oil and gas, precious metals, and timber tend to do well during periods of high inflation and rising rates. Investors have been pouring a lot of money into natural resources ETFs this year as they seek inflation hedges.
The FlexShares Morningstar Global Upstream Natural Resources Index Fund (
GUNR
) holds energy, agriculture, metals, timber and water companies. Exxon Mobil (
XOM
) and BHP (
BHP
) are its top holdings.
The SPDR S&P Global Natural Resources ETF (
GNR
) invests in natural resources companies, including those involved in agriculture, energy, and metals and mining. BHP, Nutrien (
NTR
) and Chevron (
CVX
) are its top holdings.
The iShares North American Natural Resources ETF (
IGE
) provides exposure to oil and gas, mining, and forestry companies. ConocoPhillips (
COP
) and Pioneer Natural Resources (
PXD
) are among the top holdings.
To learn more about these ETFs, please watch the short video above.
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