IGE: Natural Resource ETF Benefits From Supply Imbalances But Has Underperformed Historically

Ben Holden-Crowther417 FollowersFollow5ShareSavePlay(11min)CommentsSummaryIGE 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.I have concerns about holding selection, with plastic packaging firms, for example, seeming inappropriate for a "natural resource" oriented fund.Balancing short-term upside with long-term structural concerns, I rate the fund a "hold" for the moment. liu mingzhu/E+ via Getty Images Investment Thesis iShares North American Natural Resources ETF (IGE) aims to provide economic exposure to U.S. and Canadian natural resources through equity holdings in a variety of different sub-sectors, ranging from lumber to gold.This article was written byBen Holden-Crowther417 FollowersFollowI am an international analyst with a Buffett and Munger inspired approach to investing. My emphasis is on identifying high quality, shareholder-oriented companies which have been unfairly discounted by the market due to short term factors or irrational investor psychology. At the moment, I am particularly interested in legacy businesses considered to be in secular decline in sectors such as remittances, ATMs and tobacco, where cash generative, high yield stocks (often with under-appreciated revenue and earnings growth) are very often unfairly ignored. While emphasizing U.S. stocks, I also cover attractive opportunities within my own country (the UK) and globally.Analyst’s Disclosure: I/we have a beneficial long position in the shares of AMCR either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.