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IGE aims to provide economic exposure to U.S. and Canadian natural resource firms and has performed well recently, mainly due to the Strait of Hormuz crisis. Since its inception in 2001, its total return of 533% failed to outperform either the S&P 500 (869%) or Russell 2000 (741%). The fund is dominated by exposure to oil and gas firms and associated sub-sectors, with minimal exposure to other natural resources.
Artificial intelligence (AI), cloud computing, and machine learning are just a few of the obvious tech innovations dominating the majority of investor attention spans these days. Along with the companies focused on these technologies, attention also diverts to those integral to meeting hardware demands, like semiconductor firms.
IGE is a passively managed ETF that tracks the S&P North American Natural Resources Sector Index. IGE and XLE have similar sector compositions, but IGE has a lower weighting in the top three holdings. IGE may provide a superior return due to overvaluation and overweighting of top holdings in XLE, the fund's similar risk return ratios, and larger expected multiple expansion for IGE.
The iShares North American Natural Resources ETF is a strong exchange-traded fund for investors looking to gain exposure to North American companies in the natural resources sector. The IGE ETF has a low expense ratio of 0.41% and holds a diverse range of companies involved in the exploration, production, or distribution of natural resources. The fund's top holdings are concentrated in the energy sector, and while it has lagged behind pure play energy funds, it offers a more diversified option for investors.
iShares North American Natural Resources ETF (IGE) tracks an index of U.S. natural resource companies. IGE focuses on the energy and materials sectors, while specifically excluding the Chemical and Steel industries.
IGE is a broad portfolio of US oil companies. Capacity is very tight, with refineries and rigs being underinvested, and the capacity for OPEC production growth is ultimately pretty limited.
At the end of June, VettaFi asked advisors about their growing interest in commodities during a webcast hosted with Direxion, and I was pleasantly surprised. While 50% of respondents said they were currently getting exposure to commodity markets through a broad commodity basket, only 31% chose precious metals options of gold or silver.
While the energy sector is shining, other sectors are caught up in the sharp market sell-off, with technology bearing the brunt the most. However, a few ETFs have defied the turmoil and are up this year.