DWS targets natural resources in first US-listed active ETF

Mar 5th, 2024 | By | Category: Alternatives / Multi-Asset

DWS has introduced its first actively managed ETF in the US with the launch of a fund providing global exposure to companies in the natural resources sector.

DWS targets natural resources in first US-listed active ETF

DWS has introduced its first actively managed ETF in the US.

The Xtrackers RREEF Global Natural Resources ETF (NRES US) has been listed on Nasdaq with an expense ratio of 0.45%.

The fund seeks a long-term total return by capitalizing on opportunities across a variety of natural resource subsectors including metals, energy, agriculture, and paper & forestry. The fund’s target allocation to these various subsectors is guided by DWS Liquid Real Assets (LRA).

Eligible securities are selected from a global universe of stocks, including those listed in emerging markets, as well as from across the market capitalization spectrum.

As of the end of February, US stocks accounted for approximately 40% of the total portfolio weight with the next-largest country exposures being Canada (20.4%), the UK (7.2%), Australia (5.8%), and Brazil (5.1%).

The fund’s sector allocation was dominated by material and energy stocks which made up approximately two-thirds and one-third of the portfolio weight, respectively.

With 59 constituents, the fund’s most notable positions were Total SA (4.8%), Nutrien (4.6%), BHP Billiton (4.2%), Shell (3.9%), Chevron (3.6%), and Glencore (3.4%).

Investing in natural resources has historically offered portfolio diversification and inflation hedge benefits, while factors such as rising global incomes, infrastructure investments, strategic governmental purchases, and the intrinsic value of metals further contribute to the appeal of the sector.

DWS points out that many resource companies are in a robust financial position, characterized by strong balance sheets and significant free cash flow, enabling sustained capital returns to shareholders through dividends and buybacks.

DWS emphasizes that the combination of a growing global population, supply constraints, and a trend toward deglobalization presents significant opportunities within the natural resources sector. Given the sector’s dynamic nature, the firm advocates for an actively managed investment strategy. This approach allows for greater adaptability in responding to market fluctuations, thereby potentially enhancing investor returns in the evolving natural resources landscape.

Henry Wu, Head of Xtrackers Products US for DWS, commented: “With the launch of Xtrackers RREEF Global Natural Resources ETF, we are connecting the dots of our firm’s global capabilities to present the best of DWS to the market in an area thoughtfully selected to provide investors with our expertise in both alternative investing and ETF management. As an actively managed ETF in the global natural resources segment, we believe the fund provides an innovative, specialized, and differentiated investment solution in a competitive environment.”

John Vojticek, Head of Liquid Real Assets at DWS, added: “During the post-COVID inflationary cycle, investor portfolios were under-allocated to inflation-resilient assets. Because government deficits and debts have continued to expand, we believe natural resource equities provide a timely opportunity to protect capital in a prolonged period of gentle or minor price increases.”

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