In traditional economic cycles, resource stocks tend to outperform their sector counterparts in the latter stages of a bull market (a situation which many economists now believe we’re in), due to the fact that investors will begin to look toward sectors with negative correlations to the broader stock market such as commodities or resource stocks.
With a number of niche resource sectors performing incredibly well, with shares of base metals and other commodities rising at an impressive rate of late, investors looking to capitalize on the boom in commodity prices may look to buy shares of copper mining firms or oil energy infrastructure companies; picking and choosing said stocks, however, remains the challenge for most.
One exchange traded fund (ETF) which stands ready to assuage investor interest in buying a portfolio of companies which reflect the broader upside of the resource sector is the SPDR S&P Global Natural Resources ETF (NYSE:GNR).
This ETF does an excellent job of providing investors with a reasonable yield (currently hovering around 2%) for a sub-sector of the economy which tends to provide returns far lower than this ETF, on balance.
As such, this ETF remains a higher-risk, higher-reward option for investors betting on a continued rebound across the natural resources sector, a bet which may turn out to be a very profitable one should the stock market shift winds and begin correcting as expected by many.
Invest wisely, my friends.
