Low-cost exchange-traded funds (ETFs) are the best way to gain broad exposure to the market niches poised to outperform in the coming years…
Fuel/Oil & Gas: Vanguard Energy ETF (VDE) holds stocks of about 110 companies involved in the exploration and production of energy products such as oil, natural gas and coal. The fund, which had a recent 3% yield, is dominated by giant global oil-and-gas companies such as Chevron and Exxon Mobil. Cost: 0.10%. Year-to-date performance: 3.15%.* Important: ETFs that track oil prices directly can be very volatile and are suitable only for traders.
Agriculture: iShares MSCI Global Agriculture Producers ETF (VEGI). With about 155 stocks, this portfolio provides exposure to companies that produce fertilizers and agricultural chemicals, farm machinery, and packaged foods and meats. Top holdings: Deere & Co…fertilizer producer Nutrien. Cost: 0.39%. Performance: 1.63%.
Aerospace/Defense: SPDR S&P Aerospace & Defense ETF (XAR) spreads its assets across about 30 aerospace and defense manufacturers. While it includes giants Boeing and Lockheed Martin, 75% of the portfolio is in mid- and small-cap names such as National Presto Industries, which manufactures ammunition for the US government. Cost: 0.35%. Performance: 7.12%.
Nuclear/Renewables: VanEck Uranium+Nuclear Energy ETF (NLR) tracks foreign and domestic stocks and offers a 1.9% recent yield. The fund’s 25 companies include nuclear plants, engineering firms that build and maintain nuclear power facilities and uranium-mining companies. Top holdings: Dominion Energy…CEZ, which operates nuclear power plants in the Czech Republic. Cost: 0.60%. Performance: 4.44%.
Gold/Metals: SPDR Gold Mini-Shares Trust (GLDM) is best for investors who want direct exposure to the price of gold, which typically is used as a hedge against high inflation and geopolitical uncertainty. The actual gold backing the shares is kept in vaults in London and audited regularly. Cost: 0.10%. Performance: 2.6%.
SPDR S&P Metals & Mining ETF (XME) is best for aggressive investors who want broad exposure to companies that mine major minerals and metals. The equal-weighted portfolio holds about 35 US-based gold, steel, copper and aluminum producers including Royal Gold and Reliance Steel & Aluminum Co. Cost: 0.35%. Performance: 10.88%.